Prudential Financial Inc. PRU shares are trading at a discount compared to the Zacks Multi-line Insurance industry. It is currently trading at a price-to-earnings multiple of 7.62X, which is lower than the industry average of 8.74X, the Finance sector’s 16.87X and the Zacks S&P 500 Composite’s 22.23X. The insurer has a Value Score of A.

Image Source: Zacks Investment Research

The insurer has a market capitalization of $39.12 billion. The average volume of shares traded in the last three months was 1.56 million. 

Shares of Assurant, Inc. AIZ and CNO Financial Group, Inc. CNO are also trading at a multiple higher than the industry average, while Enact Holdings, Inc. ACT shares are trading at a discount.

PRU’s Growth Projection Encourages

The Zacks Consensus Estimate for Prudential Financial’s 2025 earnings per share indicates a year-over-year increase of 13.7%. The consensus estimate for 2026 earnings per share and revenues indicates an increase of 6.1% and 4.1%, respectively, from the corresponding 2024 estimates.

PRU’s Price Performance

Shares of this multi-line insurer have gained 3.2% in the past year. It, however, underperformed the industry’s growth of 8.1%, the Finance sector’s return of 22.1% and the S&P 500 composite’s appreciation of 19.1%.

Image Source: Zacks Investment Research

Key Points to Note

Prudential Financial is witnessing huge demand for retirement benefit products for baby boomers, which is expected to continue. The U.S. Census Bureau projects that nearly 25% of the population will be 65 years or older by 2050. PRU’s vast distribution network, compelling product portfolio and superior brand image will give it a competitive edge. The company intends to be a global leader in expanding its access to invest, insurance and retirement security. 

It 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 has a strong international presence that gives it more organic growth opportunities than its peers. Expanding its international business is vital for long-term growth. PRU has a strong footprint in Japan, which offers attractive opportunities to capitalize on protection products and retirement needs and has historically generated ROE in the 20% range. Its business in Brazil has gained sufficient scale and should become an important contributor to earnings growth in the international division over the next few years. It has also expanded in Malaysia, which is an attractive market with low life insurance penetration, a well-developed regulatory environment and long-term growth potential.

PRU has been increasing its dividend for the past 16 years. The company continues to balance investments in the growth of businesses with returning capital to shareholders.

Conclusion

Prudential Financial continues to benefit from its solid asset-based businesses, improved margins in the Group Insurance business and international operations. A high-performing asset management business and deeper reach in the pension risk transfer market are catalysts for long-term growth.  

Prudential Financial’s exposure to products like annuities and universal life, which guarantee a minimum return, will strain its capital. Its results have been suffering due to additional reserve accretion required when the low interest rate increases the value of these liabilities. The company expects individual annuities sales to continue to be lower in the near term due to repricing and repositioning of products. Lower sales reflect its pivot to less market-sensitive products.

It is better to adopt a wait-and-see approach for this Zacks Rank #3 (Hold) stock now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

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

Assurant, Inc. (AIZ) : Free Stock Analysis Report

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

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research