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Should Value Investors Consider Prudential plc Stock?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Prudential plc (PUK - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Prudential has a trailing twelve months PE ratio of 10.60, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 19.77. If we focus on the stock’s long-term PE trend, the current level puts Prudential’s current PE ratio below its midpoint over the past five years.
Further, the stock’s PE also compares favorably with the Zacks classified Finance sector’s trailing twelve months PE ratio, which stands at 16.48. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Prudential has a forward PE ratio (price relative to this year’s earnings) of 12.13, so it is fair to expect an increase in the company’s share price in the near future.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Prudential has a P/S ratio of about 0.83. This is significantly lower than the S&P 500 average, which comes in at 3.24 right now. Also, as we can see in the chart below, this is below the highs for this stock in particular over the past few years.
If anything, this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Prudential currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Prudential a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Prudential is just 1.35, a level that is slightly lower than the industry average of 1.37. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, Prudential is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Prudential might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘D’ and a Momentum score of ‘F’. This gives Prudential a Zacks VGM score—or its overarching fundamental grade—of ‘D’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The full year estimate has seen one upward and no downward revisions in the past sixty days.
This has had a small impact on the consensus estimate, as the full year estimate has inched up 0.9% in the past two months. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Prudential Public Limited Company Price and Consensus
This somewhat favorable trend is why the stock has just a Zacks Rank #2 (Buy) and why we are looking for better performance from the company in the near term.
Bottom Line
Prudential is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Boasting a good industry rank (Top 27% out of more than 250 industries) and a strong Zacks Rank, the company deserves attention right now. In fact, over the past two years, the Zacks Multi Line sector has clearly outperformed the broader market, as you can see below:
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
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Should Value Investors Consider Prudential plc Stock?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Prudential plc (PUK - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Prudential has a trailing twelve months PE ratio of 10.60, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 19.77. If we focus on the stock’s long-term PE trend, the current level puts Prudential’s current PE ratio below its midpoint over the past five years.
Further, the stock’s PE also compares favorably with the Zacks classified Finance sector’s trailing twelve months PE ratio, which stands at 16.48. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Prudential has a forward PE ratio (price relative to this year’s earnings) of 12.13, so it is fair to expect an increase in the company’s share price in the near future.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Prudential has a P/S ratio of about 0.83. This is significantly lower than the S&P 500 average, which comes in at 3.24 right now. Also, as we can see in the chart below, this is below the highs for this stock in particular over the past few years.
If anything, this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Prudential currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Prudential a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Prudential is just 1.35, a level that is slightly lower than the industry average of 1.37. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, Prudential is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Prudential might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘D’ and a Momentum score of ‘F’. This gives Prudential a Zacks VGM score—or its overarching fundamental grade—of ‘D’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The full year estimate has seen one upward and no downward revisions in the past sixty days.
This has had a small impact on the consensus estimate, as the full year estimate has inched up 0.9% in the past two months. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Prudential Public Limited Company Price and Consensus
Prudential Public Limited Company Price and Consensus | Prudential Public Limited Company Quote
This somewhat favorable trend is why the stock has just a Zacks Rank #2 (Buy) and why we are looking for better performance from the company in the near term.
Bottom Line
Prudential is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Boasting a good industry rank (Top 27% out of more than 250 industries) and a strong Zacks Rank, the company deserves attention right now. In fact, over the past two years, the Zacks Multi Line sector has clearly outperformed the broader market, as you can see below:
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research. See these stocks free >>