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Prudential plc (LON:PRU): Poised For Long-Term Success?

Miguel Kauffman

Prudential plc’s (LSE:PRU) most recent earnings update in December 2017 indicated that the company gained from a robust tailwind, eventuating to a double-digit earnings growth of 24.36%. Below, I’ve presented key growth figures on how market analysts perceive Prudential’s earnings growth outlook over the next few 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. See our latest analysis for Prudential

Market analysts’ consensus outlook for next year seems positive, with earnings growing by a robust 45.84%. This growth seems to continue into the following year with rates arriving at double digit 71.31% compared to today’s earnings, and finally hitting UK£4.58B by 2021.

LSE:PRU Future Profit Apr 26th 18

While it is helpful to understand the growth year by year relative to today’s value, it may be more beneficial to evaluate the rate at which the company is moving every year, on average. The pro 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 calculate this rate, I’ve inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 15.13%. This means, we can anticipate Prudential will grow its earnings by 15.13% every year for the next couple of years.

Next Steps:

For Prudential, I’ve compiled three relevant factors you should further examine:

  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!

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.