Shares of Prudential Financial Inc. PRU have lost 16.2% in the past year, underperforming the industry’s decline of 0.7%, the Zacks S&P 500 composite’s decrease of 2.1% and the Finance sector’s growth of 4.2%.

PRU shares are trading below the 50-day moving average, indicating a bearish trend.

The insurer has a market capitalization of $33.94 billion. The average volume of shares traded in the last three months was 1.91 million.

PRU vs. Industry, Sector & S&P 500 in One Year

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PRU Shares are Affordable

PRU shares are trading at a price to forward 12-months earnings of 6.64X, lower than the industry average of 8.04X. Its pricing, at a discount to the industry average, gives a better entry point to investors. Also, it has a Value Score of B. Shares of other insurers like Assurant, Inc. AIZ and CNO Financial Group, Inc. CNO are trading at a multiple higher than the industry average, while shares of Radian Group Inc. RDN are trading at a multiple lower than the industry average.

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PRU’s Growth Projection Encourages

The Zacks Consensus Estimate for Prudential Financial’s 2025 earnings per share indicates a year-over-year increase of 12.4%. The consensus estimate for 2026 earnings per share and revenues indicates an increase of 6.3% and 3.6%, respectively, from the corresponding 2025 estimates. 

Factors Impacting PRU

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 the 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.

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

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

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

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

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