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Analyzing Prudential’s Valuations after 3Q17

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Aug. 18 2020, Updated 6:16 a.m. ET

Enterprise-value-to-EBITDA ratio

Prudential Financial (PRU) has an EBITDA [1. enterprise value to earnings before interest, tax, depreciation, and amortization] ratio of ~7.4x on an NTM (next-12-months) basis. An average of its competitors’ enterprise-value-to-EBITDA ratio on an NTM basis stood at ~11.5x, which implies the discounted valuations of Prudential.

On an NTM basis, Prudential’s competitors Aflac (AFL), Unum Group (UNM), and CNO Financial Group (CNO) reported enterprise-value-to-EBITDA ratios of ~7.4x, ~10.4x, and ~16.6x, respectively.

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Rewarding shareholders

Prudential Financial declared a quarterly dividend of $0.75 per share on November 14, 2017. This quarterly dividend would be paid on December 14, 2017.

The amount of the quarterly dividend has remained constant for the past few months. In 3Q17, Prudential paid $324.0 million in dividends. During the same period, the company made repurchases of $312.0 million.

Prudential Financial has a price-to-cash-flow ratio of ~7.3x on an LTM (last-12-months) basis. Among its peers (XLF), CNO Financial Group (CNO), Aflac (AFL), and Reinsurance Group of America (RGA) reported price-to-cash-flow ratios of ~6.6x, ~5.2x, and ~6.3x, respectively, on an LTM basis.

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