Why You Should Hold Onto Prudential Financial (PRU) Stock

Shares of Prudential Financial, Inc. (NYSE:PRU) gained 50.56% in the last one year, significantly outperforming the Zacks categorized Multi line Insurance industry’s 35.26% increase.

We expect the company to retain momentum owing to positives like widespread international operations and deeper reach in the pension risk transfer (PRT) market.

This Zacks Rank #3 (Hold) Multi line insurer will continue to benefit from its reach and an in-depth expertise in the pension risk transfer (PRT) business. The company is also on track to establish a leadership position in the PRT market, which possesses potential and is suitable to mobilize company’s skills in the management of group annuity.

The company’s international operations too have positioned it well for long-term growth. It is expected to benefit from the AFP Habitat buyout, completed in the first quarter of 2016. The transaction, expanding its international footprint, is anticipated to result in stable growth, steady earnings and an adequate cash flow generation.

Prudential Financial has successfully generated the investors’ value by implementing shareholder-friendly measures, such as dividend payments and share repurchases, over time. It has been approved to buy back worth $1.25 billion shares in 2017.

Prudential Financial has taken several actions to improve its capital flexibility and reduce volatility. However, unfavorable currency impact and regulatory control remain headwinds.

Nonetheless, valuation is attractive at present as the stock is currently trading at a price to book multiple of 0.99, a 23.3% discount to the industry average of 1.29.

In addition, the company has a trailing 12-month return on equity (ROE) of 8.5%, which is higher than the industry’s 6.9% average. Furthermore, the company’s expected long-term earnings growth is pegged at 8.50%.

Stocks to Consider

Some better-ranked stocks from the insurance industry include Assurant, Inc. (NYSE:AIZ) , Cigna Corporation (NYSE:CI) and Old Republic International Corporation (NYSE:ORI) . Each stock holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Assurant offers risk management solutions for housing and lifestyle markets worldwide. The company delivered positive surprises in three of the last four quarters with an average beat of 6.82%.

Cigna provides insurance plus related products and services in the U.S. and internationally. The company delivered positive surprises in three of the last four quarters with an average beat of 1.35%.

Old Republic deals in insurance underwriting and related services business, primarily in the U.S. and Canada. The company delivered positive surprises in two of the last four quarters with an average beat of 12.71%.

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