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The Trefis price estimate for Prudential Financial's stock is around $108 per share
Trefis price estimate for Prudential Financial
Prudential Financial offers a wide array of financial products and services, including life insurance, annuities, retirement-related services, mutual funds, investment management, and real estate services.
Its end users include retail customers, high net worth individuals, small to medium businesses, institutional investors and corporates.
Its business model faces stiff challenges and competition from offerings by its global competitors such as: AIG, MetLife, New York Life, Hartford Financial, and AXA US.
Related Analysis
Prudential Financial Earnings: Performance and 2019 ForecastPrudential Financial Revenues: How Does PRU Makes Money?Prudential Financial Stock (NYSE:PRU)More Trefis Insurance Industry Data
#1 Estimating Prudential Financial's Total Revenues:
#1.1 Forecasting Prudential Financial's U.S Workspace Solution Revenues
U.S Workspace solution has contributed more than 30% of the total revenues over the last four years.
We expect the segment revenues to decrease by 7% y-o-y in 2019 driven by 10% drop in U.S Retirement solutions.
U.S. Workspace Solutions [=A+B]
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U.S. Retirement Solutions [A]
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U.S. Group Insurance [B]
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#1.2 Forecasting Prudential Financial's Total Revenues
Prudential Financial is expected to report $62.1 billion in Total Revenues for 2019, which is 1% less than the previous year.
This could be attributed to 7% y-o-y drop in U.S Workspace solutions, partially offset by 2% growth in International Insurance and 2% increase in Global Investment Management revenues.Further, Corporate & Closed Block revenues are expected to grow 4% y-o-y to $4.3 billion.
Total Revenues [=A+B+C+D+E]
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U.S. Workspace Solutions [A]
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U.S. Individual Solutions [B]
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International Insurance [C]
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Global Investment Management [D]
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Corporate And Closed Block [E]
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Our Interactive Dashboard Analysis, How Does Prudential Financial Make Money?, Provides An In Depth View Of The Company's Revenues.
#2 Deriving Prudential Financial's Adjusted Net Income Figure:
Prudential Financial is expected to have a Net Income of $4.8 billion in 2019 which is 18% more than the previous year.
This would be due to increase in Net Income Margin from 6.4% in 2018 to 7.7% in the current year, partially offset by higher expected Tax Rate as compared to the previous year. Improvement in net income margin would be driven by drop in total expense figure by 4% y-o-y.
Net Income Available to Common Shareholders [=A*B]
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Revenues [A]
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Net Income Margin [B]
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Notably, Adjusted Net Income decreased from $5.6 billion in 2015 to $4.3 Billion in 2016, before improving to $7.8 billion in 2017. It again dropped in 2018 to $4 billion due to negative growth in net income margin.
#3 Deriving Prudential Financial's EPS Figure:
The EPS figure has fluctuated over the last 4 years. It decreased from $12.37 in 2015 to $9.85 in 2016, before improving to $18.19 in 2017. The figure again dropped in 2018 to $9.64 due to lower net income.
We expect Prudential Financial to report an EPS of $12.15 in 2019, which could be attributed to higher Adjusted Net Income and lower Shares Outstanding.
EPS (Basic) [=A/B]
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Net Income Available to Common Shareholders [A]
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Average Share Count [B]
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Prudential Financial has regularly invested in share repurchases to boost shareholder returns. Its share repurchase is likely to touch $2 billion for the full year 2019.
#4 Estimating Prudential Financial's Share Price:
Our Price Estimate of $108 For Prudential Financial's Stock is based on our Detailed Valuation Model, and implies a 8.9x P/E Multiple on expected 2019 EPS of $12.15
Share Price [=A*B]
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P/E [A]
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EPS [B]
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Comparing Prudential Financial's P/E multiple with that of its Peers - MetLife, AIG and Hartford Financial
P/E Multiples are based on Share Price at the end of Q3, and reported (or expected) Adjusted Earnings for the full year.
Prudential Financial's expected P/E Multiple of 8.9x in 2019 is lower than AIG's 12.2x and Hartford Financial's 11.8x, but more than MetLife's expected P/E of 7.4x.
P/E PRU
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P/E MET
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P/E AIG
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P/E HIG
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1. How to save your forecasts for PRU:
Click on the blue "Try Trefis" button in the header to create an account, then navigate back to this dashboard. Now, any changes you make to these inputs will be auto-saved as a scenario (see left panel of dashboard).
2. How to monitor your scenario vs. actual results
Once you've saved your forecast, you can "rename" your scenario by clicking on the gear icon next to the scenario (on the left panel). For more info, see this quick, 30-sec video (look at the 9 sec mark)
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