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Here's Why You Should Hold Prudential Financial (PRU) Stock
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Prudential Financial, Inc. (PRU - Free Report) remains well-poised for growth, driven by higher net investment spread, lower expenses, improved earnings from joint venture investments, cost-saving initiatives and a solid financial position.
Zacks Rank & Price Performance
Prudential Financial currently carries a Zacks Rank #3 (Hold). In the past year, PRU stock has lost 6.4% compared with the industry’s decline of 4.9%.
Image Source: Zacks Investment Research
Return on Equity
PRU’s return on equity for the trailing 12 months of 15.7% expanded 650 basis points. This reflects efficiency in utilizing shareholders’ funds.
Optimistic Growth Projections
The Zacks Consensus Estimate for Prudential Financial’s 2023 and 2024 earnings per share is pegged at $11.79 and $13.07, indicating a respective year-over-year increase of 24.6% and 10.8%.
Estimate Revision
The Zacks Consensus Estimate for 2023 and 2024 has moved 0.2% and 0.4% north, respectively, in the past seven days, reflecting analysts’ optimism on the stock.
Business Tailwinds
Prudential Financial’s international businesses remain well-poised to gain from continued business growth, higher net investment spread, lower expenses and higher earnings from joint venture investments, as well as favorable underwriting results.
The U.S. businesses should continue to gain from a higher net investment spread, which includes benefits from variable investment income, lower expenses on the back of cost-saving initiatives and rising interest rates. Given its leading position in universal, term and variable life insurance and expanding Retirement business, premium growth is likely to continue in the coming quarters.
The U.S. business continues to shift toward higher growth and less market-sensitive products and markets, and enhance customer experience, while reducing costs and further expand addressable markets.
The multi-line insurer continues to invest in acquisitions and partnerships that enable it to grow in emerging markets. In the third quarter of 2022, the company acquired a 33% minority interest in Alexander Forbes Group Holdings Limited in South Africa. This investment is consistent with PRU’s strategic focus internationally on higher-growth emerging markets. The deal furthers the partnership’s specific objective to identify and make strategic investments in high-quality financial services companies in selected African geographies.
Prudential Financial undertakes several strategic initiatives, which poise it well for long-term growth. It continues to invest in the long-term sustainable growth of business through programmatic acquisitions and partnerships in emerging markets to build scale and complement businesses in support of long-term growth.
PRU boasts a sturdy balance sheet strength that includes highly liquid assets of $4.5 billion at the end of the second quarter and a capital position that continues to support an AA financial strength rating. Prudential Financial envisions about 65% free cash flow ratio of earnings and about two times its dividend. The company continues to balance investments in the growth of businesses with returning capital to shareholders.
The insurer has been increasing its dividend for the past 15 years. In February 2023, the board authorized 4% dividend increase beginning in the first quarter, which represents the 15th consecutive annual dividend increase. As of Jun 30, 2023, 5.7 million shares were repurchased under this authorization at a total cost of $500 million.
Stocks to Consider
Some better-ranked stocks from the multi-line insurance industry are Assurant, Inc. (AIZ - Free Report) , Old Republic International Corporation (ORI - Free Report) and Radian Group Inc. (RDN - Free Report) . While Assurant and Old Republic International sport a Zacks Rank #1 (Strong Buy) each, Radian Group carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Assurant’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 24.39%.
The Zacks Consensus Estimate for AIZ’s 2023 and 2024 earnings implies 13% and 11.8% year-over-year growth, respectively. In the past year, the insurer has declined 14.7%.
Old Republic International’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 29.8%.
The Zacks Consensus Estimate for ORI’s 2023 and 2024 earnings has moved 8.3% and 5.2% north, respectively, in the past 30 days. In the past year, the insurer has gained 13%.
Radian’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 30.88%.
The Zacks Consensus Estimate for RDN’s 2023 and 2024 earnings has moved 5.7% and 4% north, respectively, in the past 30 days. In the past year, the insurer has gained 17.4%.
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Here's Why You Should Hold Prudential Financial (PRU) Stock
Prudential Financial, Inc. (PRU - Free Report) remains well-poised for growth, driven by higher net investment spread, lower expenses, improved earnings from joint venture investments, cost-saving initiatives and a solid financial position.
Zacks Rank & Price Performance
Prudential Financial currently carries a Zacks Rank #3 (Hold). In the past year, PRU stock has lost 6.4% compared with the industry’s decline of 4.9%.
Image Source: Zacks Investment Research
Return on Equity
PRU’s return on equity for the trailing 12 months of 15.7% expanded 650 basis points. This reflects efficiency in utilizing shareholders’ funds.
Optimistic Growth Projections
The Zacks Consensus Estimate for Prudential Financial’s 2023 and 2024 earnings per share is pegged at $11.79 and $13.07, indicating a respective year-over-year increase of 24.6% and 10.8%.
Estimate Revision
The Zacks Consensus Estimate for 2023 and 2024 has moved 0.2% and 0.4% north, respectively, in the past seven days, reflecting analysts’ optimism on the stock.
Business Tailwinds
Prudential Financial’s international businesses remain well-poised to gain from continued business growth, higher net investment spread, lower expenses and higher earnings from joint venture investments, as well as favorable underwriting results.
The U.S. businesses should continue to gain from a higher net investment spread, which includes benefits from variable investment income, lower expenses on the back of cost-saving initiatives and rising interest rates. Given its leading position in universal, term and variable life insurance and expanding Retirement business, premium growth is likely to continue in the coming quarters.
The U.S. business continues to shift toward higher growth and less market-sensitive products and markets, and enhance customer experience, while reducing costs and further expand addressable markets.
The multi-line insurer continues to invest in acquisitions and partnerships that enable it to grow in emerging markets. In the third quarter of 2022, the company acquired a 33% minority interest in Alexander Forbes Group Holdings Limited in South Africa. This investment is consistent with PRU’s strategic focus internationally on higher-growth emerging markets. The deal furthers the partnership’s specific objective to identify and make strategic investments in high-quality financial services companies in selected African geographies.
Prudential Financial undertakes several strategic initiatives, which poise it well for long-term growth. It continues to invest in the long-term sustainable growth of business through programmatic acquisitions and partnerships in emerging markets to build scale and complement businesses in support of long-term growth.
PRU boasts a sturdy balance sheet strength that includes highly liquid assets of $4.5 billion at the end of the second quarter and a capital position that continues to support an AA financial strength rating. Prudential Financial envisions about 65% free cash flow ratio of earnings and about two times its dividend. The company continues to balance investments in the growth of businesses with returning capital to shareholders.
The insurer has been increasing its dividend for the past 15 years. In February 2023, the board authorized 4% dividend increase beginning in the first quarter, which represents the 15th consecutive annual dividend increase. As of Jun 30, 2023, 5.7 million shares were repurchased under this authorization at a total cost of $500 million.
Stocks to Consider
Some better-ranked stocks from the multi-line insurance industry are Assurant, Inc. (AIZ - Free Report) , Old Republic International Corporation (ORI - Free Report) and Radian Group Inc. (RDN - Free Report) . While Assurant and Old Republic International sport a Zacks Rank #1 (Strong Buy) each, Radian Group carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Assurant’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 24.39%.
The Zacks Consensus Estimate for AIZ’s 2023 and 2024 earnings implies 13% and 11.8% year-over-year growth, respectively. In the past year, the insurer has declined 14.7%.
Old Republic International’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 29.8%.
The Zacks Consensus Estimate for ORI’s 2023 and 2024 earnings has moved 8.3% and 5.2% north, respectively, in the past 30 days. In the past year, the insurer has gained 13%.
Radian’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 30.88%.
The Zacks Consensus Estimate for RDN’s 2023 and 2024 earnings has moved 5.7% and 4% north, respectively, in the past 30 days. In the past year, the insurer has gained 17.4%.