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What Are Prudential Financial’s Valuations?


Mar. 7 2018, Updated 7:30 a.m. ET

Discounted valuations

Prudential Financial’s (PRU) price-to-earnings ratio is 8.93x on an NTM (next-12-month) basis. The average for its peer group is 11.0x, which implies Prudential’s discounted valuations. Competitors Reinsurance Group of America (RGA), CNO Financial Group (CNO), and MetLife (MET) have price-to-earnings ratios on an NTM basis of 12.20x, 11.47x, and 9.32x, respectively.

Prudential could recover from its discounted valuations since its Investment Management division is expected to perform well moving forward. In 4Q17, the division has total average assets under management of $1.14 trillion compared to $1.07 trillion in 4Q16.

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Price target, dividends

Prudential Financial’s one-year price target is $128.43, which reflects an increase of 17.4% from its current price of $109.43. An increase in its quarterly dividend payout could help improve its valuations. The company declared a $0.75 per share quarterly dividend in November 2017 and a $0.90 per share dividend in February 2018.

In 4Q17, Prudential rewarded its shareholders with $635 million in dividends. In 2017, it gave them $2.6 billion, which included the $635 million in 4Q17. The company has surpassed its 2017 earnings objectives with positive momentum in all its businesses.

Prudential Financial’s price-to-earnings ratio is 11.0x on an LTM (last-12-month) basis. The ratios for Reinsurance Group of America (RGA), CNO Financial Group (CNO), and MetLife (MET) are 12.42x, 23.02x, and 11.49x, respectively, on an LTM basis.


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