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Is it Time Add Prudential Financial (PRU) Stock to Portfolio?
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Shares of Prudential Financial, Inc. (PRU - Free Report) gained momentum recently. Should to add the Zacks Rank #2 (Buy) multi line insurer be in your portfolio?
Factors to Consider
Prudential Financial will continue to reap the benefits from its reach and in-depth expertise in the pension risk transfer (PRT) business. Moreover, the company is on track to establish its leadership position in the PRT market, which possesses excellent potential and is a perfect fit for the company’s skills in the management of group annuity.
Moreover, the multi line insurer’s widespread international operations have paved the way for long-term growth. In addition, the company is expected to benefit from the AFP Habitat buyout, which was completed in the first quarter of 2016. The transaction is anticipated to result in stable growth, steady earnings, and cash flow generation. Further, Prudential Financial remains upbeat about the transaction as it expands its international footprint.
Prudential Financial remains well poised for growth on the back of its high performing asset management business. This apart, the company has been successfully enhancing investors’ value through shareholder-friendly moves like dividend payments and share buybacks.
Shares of Prudential Financial have gained 27.3% and have outperformed the Zacks categorized Multi Line industry’s increase of 10.5%, year to date. Apart from the abovementioned growth drivers, solid top-line growth as well as stellar premium and investment income performance resulted in the impressive financial results. Moreover, a robust liquidity position backed by strong cash flow generation has helped the company to invest in strategic initiatives, which in turn, accelerated its growth. Notably, the company has witnessed upward revision of its full-year 2016 estimates over the last 60 days.
The long-term expected earnings growth is pegged at 8.5%. Notably, Reinsurance Group carries a VGM score of A. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores.
Valuation is also attractive at present as the stock is currently trading at a forward P/E of 11.6x, a discount to the industry average of 13.5x. On a price-to-book basis, shares are trading at 0.8x compared with the industry average of 1.1x. Prudential Financial has a trailing 12-month return on equity (ROE) of 7.7%, which is higher than the industry average of 5.2%.
In an evolving and challenging environment, the company remains optimistic about its prospects and ability to generate differentiated returns and solid cash flows. More importantly, the company’s strategic investments in its product portfolio, along with distribution and technology, will allow it to succeed and capitalize on growth opportunities in the future.
Radian Group offers mortgage and real estate products and services in the U.S. The company delivered positive surprises in two of the last four quarters, with an average beat of 5.87%.
FBL Financial provides annuity and individual life insurance products. The company delivered positive surprises in two of the last four quarters, with an average beat of 3.26%.
James River Group offers specialty insurance and reinsurance services in the U.S. The company delivered positive surprises in all of the last four quarters with an average beat of 3.60%.
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Is it Time Add Prudential Financial (PRU) Stock to Portfolio?
Shares of Prudential Financial, Inc. (PRU - Free Report) gained momentum recently. Should to add the Zacks Rank #2 (Buy) multi line insurer be in your portfolio?
Factors to Consider
Prudential Financial will continue to reap the benefits from its reach and in-depth expertise in the pension risk transfer (PRT) business. Moreover, the company is on track to establish its leadership position in the PRT market, which possesses excellent potential and is a perfect fit for the company’s skills in the management of group annuity.
Moreover, the multi line insurer’s widespread international operations have paved the way for long-term growth. In addition, the company is expected to benefit from the AFP Habitat buyout, which was completed in the first quarter of 2016. The transaction is anticipated to result in stable growth, steady earnings, and cash flow generation. Further, Prudential Financial remains upbeat about the transaction as it expands its international footprint.
Prudential Financial remains well poised for growth on the back of its high performing asset management business. This apart, the company has been successfully enhancing investors’ value through shareholder-friendly moves like dividend payments and share buybacks.
Shares of Prudential Financial have gained 27.3% and have outperformed the Zacks categorized Multi Line industry’s increase of 10.5%, year to date. Apart from the abovementioned growth drivers, solid top-line growth as well as stellar premium and investment income performance resulted in the impressive financial results. Moreover, a robust liquidity position backed by strong cash flow generation has helped the company to invest in strategic initiatives, which in turn, accelerated its growth. Notably, the company has witnessed upward revision of its full-year 2016 estimates over the last 60 days.
The long-term expected earnings growth is pegged at 8.5%. Notably, Reinsurance Group carries a VGM score of A. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores.
Valuation is also attractive at present as the stock is currently trading at a forward P/E of 11.6x, a discount to the industry average of 13.5x. On a price-to-book basis, shares are trading at 0.8x compared with the industry average of 1.1x. Prudential Financial has a trailing 12-month return on equity (ROE) of 7.7%, which is higher than the industry average of 5.2%.
In an evolving and challenging environment, the company remains optimistic about its prospects and ability to generate differentiated returns and solid cash flows. More importantly, the company’s strategic investments in its product portfolio, along with distribution and technology, will allow it to succeed and capitalize on growth opportunities in the future.
Stocks that Warrant a Look
Investors interested in other well-ranked stocks from the same space might consider Radian Group Inc. (RDN - Free Report) , FBL Financial Group, Inc. and James River Group Holdings, Ltd. (JRVR - Free Report) . Each of these stocks holds the same Zacks Rank as Prudential Financial. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Radian Group offers mortgage and real estate products and services in the U.S. The company delivered positive surprises in two of the last four quarters, with an average beat of 5.87%.
FBL Financial provides annuity and individual life insurance products. The company delivered positive surprises in two of the last four quarters, with an average beat of 3.26%.
James River Group offers specialty insurance and reinsurance services in the U.S. The company delivered positive surprises in all of the last four quarters with an average beat of 3.60%.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>