Reasons to Hold Prudential Financial (PRU) in Your Portfolio Now

Prudential Financial, Inc. PRU is well-poised to gain on the back of growing pension risk transfer (PRT) market, higher emerging markets earnings, expanding distribution, product offerings, improved spread income, strategic acquisitions and a solid financial position.

Zacks Rank & Price Performance

Prudential Financial currently carries a Zacks Rank #3 (Hold). Over the past year, the stock has risen 33.6% compared with the industry’s growth of 21.5%.

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Return on Equity (ROE)

Prudential Financial’s ROE of 16% expanded 120 basis points year over year. This shows the company’s efficiency in managing shareholders’ funds.

Optimistic Growth Projections

The Zacks Consensus Estimate for Prudential Financial’s 2024 earnings per share (EPS) is pegged at $13.48, indicating a year-over-year increase of 16%. The consensus estimate for revenues is pinned at $55.44 billion, implying a rise of 8.9% year over year.

The Zacks Consensus Estimate for 2025 EPS is pegged at $14.42, indicating a year-over-year improvement of 7%. The consensus estimate for revenues is pegged at $57.12 billion, implying an increase of 3% year over year.

Estimate Revision

The Zacks Consensus Estimate for PRU’s 2024 and 2025 earnings has moved 1.5% and 0.6% north, respectively, in the past 60 days, reflecting analysts’ optimism on the stock.

Business Tailwinds

Prudential Financial’s International businesses are expected to gain from higher emerging markets earnings, a favorable impact from annual assumption update and other refinements. It aims at providing high-quality service and expanding distribution and product offerings via a differentiated multi-channel distribution model as well as other businesses.

The U.S. businesses should continue to gain from a favorable and comparable impact from annual assumption update, higher spread income and more favorable underwriting.

Prudential Financial has been a leader in the PRT market, helping companies reduce risks related to pension liabilities, such as interest rate risk, earnings volatility and participant longevity. PRU recently announced that it has been selected for a PRT transaction from Verizon Communications Inc. This move bodes well for the insurer’s Retirement Strategies business, whose market is expected to grow over time.

The multi-line insurer continues to invest in partnerships that enable it to grow in emerging markets. PRU undertakes several strategic initiatives, which poise it well for long-term growth. It continues to invest in the long-term sustainable growth of the business through programmatic acquisitions and partnerships in emerging markets to build scale and complement businesses in support of long-term growth.

Prudential Financial boasts a sturdy balance sheet strength that includes highly liquid assets of $4.5 billion as of Dec 31, 2023 and a capital position that continues to support an AA financial strength rating. The company continues to balance investments in the growth of businesses with returning capital to shareholders.

The multi-line insurer has been increasing its dividend for the past 15 years. Its dividend yield of 4.6% compares favorably with the industry’s figure of 2.4%. In the first quarter of 2024, the board also authorized a 4% dividend increase, which represents the 16th consecutive annual dividend increase.

Stocks to Consider

Some better-ranked stocks from the multi-line insurance industry are Enact Holdings ACT, CNO Financial Group CNO and MGIC Investment Corporation MTG. While Enact Holdings and CNO Financial sport a Zacks Rank #1 (Strong Buy) each, MGIC Investment carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Enact Holdings delivered a four-quarter average earnings surprise of 24.59%. In the past year, shares of ACT have risen 35.5%.

The Zacks Consensus Estimate for ACT’s 2024 and 2025 earnings has moved up 0.7% and 1.5%, respectively, in the past seven days.

The Zacks Consensus Estimate for CNO Financial’s 2024 and 2025 earnings implies an increase of 2.5% and 7.1%, respectively, from the year-ago estimated numbers. In the past year, shares of CNO have risen 20.4%.

CNO’s earnings surpassed estimates in two of the last four quarters and missed in the other two, the average surprise being 3.62%.

MGIC Investment delivered a four-quarter average earnings surprise of 14.84%. In the past year, the insurer's shares have surged 64.6%.

The Zacks Consensus Estimate for MTG’s 2024 and 2025 earnings has moved up nearly 0.4% and 0.3%, respectively, in the past 30 days.

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MGIC Investment Corporation (MTG) : Free Stock Analysis Report

CNO Financial Group, Inc. (CNO) : Free Stock Analysis Report

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

Enact Holdings, Inc. (ACT) : Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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