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How Do Analysts See Prudential plc (LON:PRU) Performing In The Next Couple Of Years?

Simply Wall St

The latest earnings update Prudential plc (LON:PRU) released in March 2019 confirmed that the company benefited from a strong tailwind, leading to a double-digit earnings growth of 26%. Below, I've presented key growth figures on how market analysts view Prudential's earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.

View our latest analysis for Prudential

Market analysts' prospects for the coming year seems positive, with earnings climbing by a robust 33%. This growth seems to continue into the following year with rates reaching double digit 45% compared to today’s earnings, and finally hitting UK£4.6b by 2022.

LSE:PRU Past and Future Earnings, August 7th 2019

Even though it is useful to be aware of the rate of growth each year relative to today’s value, it may be more valuable estimating the rate at which the business is moving on average every year. The benefit of this method is that it ignores near term flucuations and accounts for the overarching direction of Prudential's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I've inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 11%. This means, we can presume Prudential will grow its earnings by 11% every year for the next couple of years.

Next Steps:

For Prudential, there are three essential factors you should further research:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is PRU worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether PRU is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of PRU? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.