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Why Should You Stay Invested in Prudential (PRU) Stock?

Prudential Financial Inc. PRU has been riding on the huge demand for retirement benefits products, recurring premium sales, greater scale, expanded product offerings and broader distribution capabilities, cost savings and a solid capital position. These along with favorable growth make it a stock worth retaining in one’s portfolio.

PRU has a decent earnings surprise history. It surpassed estimates in two of the last four quarters and missed in the other two, the average being 3.64%.

PRU’s return on equity exhibits improvement, reflecting efficiency in utilizing shareholders’ funds.

Zacks Rank & Price Performance

Prudential currently carries a Zacks Rank #3 (Hold). In a year, the stock has gained 3.2%, compared with the industry’s increase of 6.9%.

Zacks Investment Research
Zacks Investment Research


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Optimistic Growth Projections

The Zacks Consensus Estimate for 2023 earnings is pegged at $11.79, indicating an improvement of 21.7% from the year-ago reported figure.

Northbound Estimate Revision

The Zacks Consensus Estimate for 2022 and 2023 earnings has moved 0.8% and 1% north in the past 30 days, reflecting analyst optimism

Business Tailwinds

Prudential is one of 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. A vast distribution network, compelling product portfolio and superior brand image will give it a competitive edge.

The insurer has a strong international presence that gives it more organic growth opportunities than its peers. Expansion of its international business is vital for long-term growth. PRU also invests in businesses to expand its addressable market and to continue to improve expense and capital efficiency.

Prudential remains on track to become a higher-growth, less market-sensitive business. It expects to double its growth businesses to more than 30% of earnings and keep the individual annuities business to 10% or less of earnings.

Effective Capital Deployment

Based on operational excellence, Prudential Financial has increased its dividend for the last 14 years, witnessing a CAGR of 9.5% in the past nine years (2014-2022). It currently yields 4.9%, better than the industry average of 2.4%.

Prudential envisions about 65% free cash flow ratio of earnings and about two times its dividend. It expects to return $11 billion to shareholders via share buyback through the end of 2023, of which it has already returned $7 billion.

Stocks to Consider

Some better-ranked stocks from the property and casualty insurance industry are MGIC Investment Corporation MTG, Radian Group Inc. RDN and EverQuote EVER, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The bottom line of MGIC Investment surpassed estimates in each of the last four quarters, the average being 36.34%. Year to date, the insurer has lost 7.1%.

The Zacks Consensus Estimate for MTG’s 2022 earnings indicates a year-over-year increase of 49.7%. The expected long-term earnings growth rate is pegged at 5%.

Radian delivered a trailing four-quarter average earnings surprise of 45.10%. Year to date, RDN has lost 9%.

The Zacks Consensus Estimate for Radian’s 2022 earnings indicates a year-over-year increase of 49.5%. The expected long-term earnings growth rate is pegged at 5%.

EverQuote’s earnings surpassed estimates in each of the last four quarters, the average being 40.50%. Year to date, EVER has lost 29.4%.

The Zacks Consensus Estimate for EVER’s 2022 and 2023 earnings has moved 45.5% and 17.6% north in the past 30 days.

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MGIC Investment Corporation (MTG) : Free Stock Analysis Report

Prudential Financial, Inc. (PRU) : Free Stock Analysis Report

Radian Group Inc. (RDN) : Free Stock Analysis Report

EverQuote, Inc. (EVER) : Free Stock Analysis Report

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