Prudential Financial Inc. PRU closed at $129.41 on Friday, near its 52-week high of $130.55. This proximity underscores investor confidence. It has the ingredients for further price appreciation. The stock is trading above the 50-day and 200-day simple moving averages (SMA) of $124.08 and $117.66, respectively, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.

Shares of this multi-line insurer have rallied 24.8% year to date, outperforming the Finance sector’s return of 22.9%. It, however, underperformed the industry’s growth of 26% and the S&P 500 composite’s return of 26.7%.
 

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With a market capitalization of $46.1 billion, the average volume of shares traded in the last three months was 1.48 million.

PRU’s Growth Projection Encourages

The Zacks Consensus Estimate for Prudential Financial’s 2024 earnings per share indicates a year-over-year increase of 14.8%. The consensus estimate for revenues is pegged at $68.20 billion, implying a year-over-year improvement of 34%. 

The consensus estimate for 2025 earnings per share indicates a year-over-year increase of 10% from the corresponding 2024 estimate.

Optimistic Analyst Sentiment on PRU

Six out of the nine analysts covering the stock have raised estimates for 2024 and four analysts have raised the same for 2025 over the past 30 days. Thus, the Zacks Consensus Estimate for both 2024 and 2025 moved 0.3% north in the last 30 days.

PRU’s Favorable Return on Capital

Return on invested capital (ROIC) has been increasing over the last few quarters as the company raised its capital investment over the same time frame, reflecting PRU’s efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 0.9%, better than the industry average of 2.5%.

Key Points to Note for PRU

Prudential Financial continues to benefit from its solid asset-based businesses, improved margins in the Group Insurance business and international operations. A high-performing asset management business and deeper reach in the pension risk transfer market are catalysts for long-term growth. It intends to be a global leader in expanding its access to investment, insurance and retirement security. 

Prudential Financial has emerged to be among the top five individual life insurance companies in the United States with new recurring premium sales, greater scale, expanded product offerings and broader distribution capabilities. It holds the leading position in universal, term and variable life insurance and expanding Retirement business.

The U.S. business segment continues to focus on growing its market-leading businesses by transforming its capabilities to improve customer experiences. It also continues expanding in the addressable market with new financial solutions, leveraging the capabilities across PRU.

Prudential Financial has a strong international presence that gives it more organic growth opportunities than its peers. Expanding its international business is vital for long-term growth. Prudential has a strong footprint in Japan, which offers attractive opportunities to capitalize on protection products and retirement needs and has historically generated ROE in the 20% range.

Its business in Brazil has gained sufficient scale and should become an important contributor to earnings growth in the international division over the next few years. It also expanded in Malaysia, which is an attractive market with low life insurance penetration, a well-developed regulatory environment and long-term growth potential.

PRU Shares are Affordable

The stock is undervalued compared with its industry. It is currently trading at a price-to-earnings multiple of 8.88, lower than the industry average of 9.63. The insurer has an impressive Value Score of A. PRU shares are cheaper when compared with other insurers like Assurant, Inc. AIZ, CNO Financial Group, Inc. CNO and MGIC Investment Corporation MTG.

Conclusion

Growing presence in the pension risk transfer market, higher emerging markets earnings, expanded distribution, compelling product offerings, strategic acquisitions and a solid financial position make PRU a strong contender for being in one’s portfolio.

It is, therefore, wise to hold on to this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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MGIC Investment Corporation (MTG) : Free Stock Analysis Report

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