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Here's Why Hold Strategy is Apt for Prudential Financial (PRU)

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Prudential Financial, Inc. (PRU - Free Report) has been gaining momentum on the back of higher emerging markets earnings, improved spread income, favorable underwriting and a solid financial position

Zacks Rank & Price Performance

Prudential Financial currently carries a Zacks Rank #3 (Hold). Over the past six months, the stock has gained 16.9% compared with the industry’s rise of 11.4%.

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Return on Equity

PRU’s return on equity of 16% expanded 583 basis points year over year. This shows the company’s efficiency in managing shareholders’ funds.

Optimistic Growth Projections

The Zacks Consensus Estimate for Prudential Financial’s 2024 earnings per share is pegged at $13.27, indicating a year-over-year increase of 14%.

Estimate Revision

The Zacks Consensus Estimate for PRU’s 2024 earnings has moved 0.3% north in the past 30 days, reflecting analysts’ optimism on the stock.

Style Score

Prudential Financial has a VGM Score of B. The VGM Score helps identify stocks with the most attractive value, best growth and most promising momentum.

Business Tailwinds

Prudential Financial’s International businesses are expected to gain from higher emerging markets earnings, a favorable impact from annual assumption update and other refinements. It aims at providing high-quality service and expanding distribution and product offerings via a differentiated multi-channel distribution model as well as other businesses.

The U.S. businesses should continue to gain from a favorable and comparable impact from annual assumption update, higher spread income and more favorable underwriting.

Prudential Financial’s asset management arm, PGIM, recently launched two buffer ETF series, namely PGIM U.S. Large-Cap Buffer 12 ETF and PGIM U.S. Large-Cap Buffer 20 ETF. Buffer ETF will enhance PGIM’s offerings and help it cater to the evolving needs of investors. The launch of these 2 ETF series bodes well for PRU as it will contribute to its asset management fees in the future. With this new launch, PGIM’s total active ETFs have doubled to 16 from last year.

The multi-line insurer continues to invest in partnerships that enable it to grow in emerging markets. PRU undertakes several strategic initiatives, which poise it well for long-term growth. It continues to invest in the long-term sustainable growth of the business through programmatic acquisitions and partnerships in emerging markets to build scale and complement businesses in support of long-term growth.

Prudential Financial boasts a sturdy balance sheet strength that includes highly liquid assets of $4.3 billion at the end of the third quarter and a capital position that continues to support an AA financial strength rating. The company continues to balance investments in the growth of businesses with returning capital to shareholders.

The multi-line insurer has been increasing its dividend for the past 15 years. Its dividend yield of 4.7% compares favorably with the industry’s figure of 2.5%. As of Sep 30, 2023, 8.3 million shares were repurchased under the shares repurchase authorization for $750 million.

PRU has an impressive Growth Score of B. This style score helps analyze the growth prospects of a company.

Stocks to Consider

Some better-ranked stocks from the multi-line insurance industry are Assurant, Inc. (AIZ - Free Report) , CNO Financial Group, Inc. (CNO - Free Report) and MGIC Investment Corporation (MTG - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Assurant’s earnings surpassed estimates in each of the last four quarters, the average surprise being 42.38%. Over the past six months, the insurer has gained 31.7%.

The Zacks Consensus Estimate for AIZ’s 2024 earnings implies 4.2% year-over-year growth.

The Zacks Consensus Estimate for CNO Financial’s 2024 earnings implies 9.7% year-over-year growth. Over the past six months, the insurer has gained 15.6%.

The Zacks Consensus Estimate for CNO’s 2024 revenues implies a year-over-year increase of 1.6%.

MGIC Investment’s earnings surpassed estimates in each of the last four quarters, the average surprise being 12.57%. Over the past six months, the insurer has gained 23.9%.

The Zacks Consensus Estimate for MTG’s 2024 revenues implies a year-over-year increase of 7.6%.

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