Long-established in the Insurance industry, Prudential Financial Inc (PRU, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 0.57%, juxtaposed with a three-month change of 12.8%. However, fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Prudential Financial Inc.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 5/10
- Profitability rank: 5/10
- Growth rank: 1/10
- GF Value rank: 7/10
- Momentum rank: 10/10
Based on the above method, GuruFocus assigned Prudential Financial Inc a GF Score of 68 out of 100, which signals poor future outperformance potential.
Understanding Prudential Financial Inc's Business
Prudential Financial Inc, with a market cap of $45.61 billion and sales of $73.27 billion, is a diversified insurance giant. It offers annuities, life insurance, retirement plan services, and asset management products. While it operates in several countries, the bulk of its revenue comes from the United States and Japan. Its investment management business, PGIM, contributes approximately 10% of its earnings and manages around $1.3 trillion in assets. The US businesses, responsible for about 50% of earnings, include Institutional Retirement Strategies, Individual Retirement Strategies, Group Insurance, Individual Life Insurance, and Assurance IQ. The international business segment contributes approximately 40% of earnings with a strong market position in Japan.
Financial Strength Breakdown
Prudential Financial Inc's financial strength indicators present some concerning insights about the company's balance sheet health. The interest coverage ratio of 3.59 positions it worse than 82.15% of 325 companies in the Insurance industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. Additionally, the company's low cash-to-debt ratio at 0.94 indicates a struggle in handling existing debt levels.
Profitability Breakdown
Prudential Financial Inc's low Profitability rank can also raise warning signals. The company's Net Margin has declined over the past five years (-29.03%), with the following data: 2019: 6.46; 2020: -0.66; 2021: 12.46; 2022: -2.89; 2023: 4.59.
Growth Prospects
A lack of significant growth is another area where Prudential Financial Inc seems to falter, as evidenced by the company's low Growth rank. Lastly, Prudential Financial Inc's predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Next Steps
Considering the company's financial strength, profitability, and growth metrics, the GF Score highlights Prudential Financial Inc's unparalleled position for potential underperformance. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
