On Dec 23, 2013, shares of Prudential Financial, Inc. ( PRU) hit a 52-week high of $92.18. The momentum was driven by strong results so far this year, the recent dividend hike and an improving operating environment.
Prudential has a well diversified business profile with reach in different markets and a broad product portfolio. The company is set to benefit from the aging American population, which will create a huge demand for retirement benefits products as baby boomers enter retirement.
A significant reach in international markets is another differentiator for the company.
A gradually recovering economy and an increasing interest rate environment also bode well for the company.
This Zacks Rank #2 (Buy) life insurer boasts of solid asset quality, and overall sound capital position, liquidity and financial flexibility, which drives credit rating agencies to give it a strong credit score.
Prudential has also witnessed an uptick in its Zacks Consensus Estimates. Over the past 60 days, all of the estimates moved north by 10.1% to $9.70 per share. The same for 2014 went up 1.6% to $9.22 per share as 11 of 16 estimates were raised. The expected long term growth rate for the stock is about 14.2%.
Valuation for Prudential also looks attractive. The shares are trading at 35% discount to the industry average on a forward price-to-earnings basis and 24% discount to a price-to-book basis. With Return on equity 43.7% higher than the industry average, this stock looks undervalued.