How Prudential Financial’s Valuations Stack Up Compared to Peers



Prudential Financial’s valuations

The price-to-book ratio of Prudential Financial (PRU) stood at 0.85x on an NTM (next-12-month) basis, which is lower than the peer average of 1.22x. Competitors Travelers Companies (TRV), Hartford Financial Services (HIG), and MetLife (MET) have price-to-book ratios of 1.42x, 1.37x, and 0.89x, respectively, on an NTM basis.

Prudential Financial is expected to recover from the discounted valuations, as the company is expected to witness an uptrend in business momentum moving forward. Additionally, the company has been making deployments in order to take advantage of the opportunities available.

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What could affect Prudential Financial?

Prudential Financial’s business activities could be impacted by market risks like fluctuations in exchange rates as well as equity prices. In addition, global factors impacting the equity markets also impact the company’s investment management division. Declining momentum in the equity prices could negatively impact the investment management division’s average assets under management (or AUM), resulting in the lower base fees.

Moreover, market risks might lead to fewer deployment opportunities. Prudential Financial’s business is impacted by interest rates. Higher interest rates would benefit the company’s operations. The Federal Reserve is expected to raise interest rates at least twice in the rest of 2018.

The price-to-book ratio of Prudential stood at 0.81x on an LTM (last-12-month) basis, while peers (XLF) Travelers Companies, Hartford Financial Services, and MetLife have ratios of 1.51x, 1.43x, and 0.83x, respectively, on an LTM basis.


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