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Prudential Financial Looks Undervalued Now With A Stable Yield Of 6%

Jun. 07, 2023 5:43 AM ETPrudential Financial, Inc. (PRU)PFH, PRH, PRS15 Comments


  • Prudential Financial, a $30-billion market-cap player in the financial services sector, oversees a vast portfolio of assets totaling around $1.417 trillion as of Q1 FY23.
  • Prudential's Q1 2023 financial results showed a mixed performance across segments, with underlying business growth, but challenges in asset management fees, fee income, and variable investment income.
  • However, recovery tendencies are already visible. At the same time, the dividend yield of ~6% appears to be stable and the stock is undervalued at ~7x forwarding earnings.
  • Prudential has a significant investment portfolio in CMBS that could be negatively impacted by a decline in value.
  • Despite some risks, I assign PRU stock a Buy rating with a year-end price target of $95 per share.
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One Prudential Plaza in downtown. Prudential is reducing greenhouse gas emissions by installing solar panels and LED lightbulbs I


The Company

Prudential Financial (NYSE:PRU), a $30-billion market-cap player in the financial services sector, oversees a vast portfolio of assets totaling around $1.417 trillion as of March 31, 2023 [10-Q filing]. Its operations span across key

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This article was written by

Danil Sereda profile picture

The chief investment analyst in a small family office registered in Singapore, responsible for developing investment ideas in equities, setting parameters for investment portfolio allocation, and analyzing potential venture capital investments.

A generalist in nature, common sense investing approach. BS in Finance. The thesis description can be found in this article.

During the heyday of the IPO market, I developed an AI model [in the R statistical language] that returned an alpha of around 24% over the IPO market's return in 2021. Currently, I focus on medium-term investment ideas based on cycle analysis and fundamental analysis of individual companies and industries.

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**Disclaimer: Associated with Oakoff Investments, another Seeking Alpha Contributor

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (15)

Steve Fischer profile picture
"undervalued " is a term thrown around often. PFU sells at book value while many other financial companies. JXN BHF CUBI sell for a fraction of the BV- they are different of course and Prudential may be a solid company but think of a different term.
Dividend God profile picture
long Pru
CincinnatiRick profile picture
$95 not a very ambitious price target. A simple return to normalcy in the markets would get you there easily.
Tempted to add more PRU.

Retired income investor
I own it, the author doesn’t. My actual experience with Pru is don’t buy at this level. Look at the beta, look at the 10yr return, lower rates, higher rates, whatever you pick.

Be patient, and buy low 70s
enjoyed your article on PRU
Dicktater143 profile picture
Well said , long PRU .
ndardick profile picture
Excellent article, Danil. It's serendipity. While you and I have never discussed PRU with each other, I recently acquired 3/4 of a full position in PRU at about its current price for the handsome dividend in excess of 6% and its reasonable amount of potential appreciation. I agree with your Buy rating and $95 year end price target. Morgan Stanley recently set a 12-month price target of $102.
Thanks for the article Danil. Can you comment on the potential exposure/risk for PRU if the FED continues tightening and the ongoing (but quiet-for-the-moment) banking crises heats up again?
Thanks for the well written update, long term holder here reinvesting those dividends and watching its slowly grow into a giant holding
It will be a slow recovery for PRU. The economy and their past mistakes will take time for to overcome. The upside is greater than the downside at this time. I am long PRU and expect another five cents per quarter at the usual annual raise.
@cons123 I agree. It won’t be a rocketship back to $100.
gastro4 profile picture
Thanks for analysis
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