Prudential Financial’s stock has been performing well, with a YTD gain of around 13% compared to a 9% rise in the S&P500 index. Despite trading above its fair value of $108 per share, PRU stock has seen strong gains of 45% since early January 2021. However, the stock’s performance has been inconsistent, with returns of 39% in 2021, -8% in 2022, and 4% in 2023, underperforming the S&P 500 in the last year. The Trefis High Quality Portfolio, with a collection of 30 stocks, has consistently outperformed the S&P 500 over the same period, suggesting better returns with less risk for the portfolio stocks.
In the fourth quarter of 2023, Prudential Financial missed street estimates, reporting total revenues of $15.1 billion, up 12% y-o-y. The increase was primarily due to a decrease in net realized investment losses, with premiums, net investment income, and asset management fees also showing growth. Premiums contribute close to 50% of the top line, benefiting from growth in institutional retirement strategies. Despite a decrease in total benefits and expenses, the company reported an adjusted net income of $1.3 billion, compared to a loss of -$52 million in the year-ago period.
For FY 2023, the company’s top-line declined 5% y-o-y to $53.98 billion, primarily due to lower premiums, partially offset by higher asset management fees. Net realized losses also decreased from $4.5 billion to $3.6 billion in the year, leading to an adjusted net income of $2.5 billion. Moving forward, Q1 results are expected to follow a similar trend, with revenues forecasted to remain around $53.5 billion in FY2024. PRU’s annual GAAP EPS is likely to remain around $9.06, with a P/E multiple of 12x leading to a valuation of $108.
Given the uncertain macroeconomic environment with high oil prices and elevated interest rates, there are concerns about whether PRU may underperform the S&P 500 over the next 12 months. The company’s performance in 2023, with inconsistent returns and a miss on street estimates in the fourth quarter, raises questions about its future outlook. However, with a history of strong gains and a focus on institutional retirement strategies, Prudential Financial may still have the potential to perform well in the coming year.
Investors may be looking to Trefis’ market-beating portfolios for guidance on where to invest their money. The Trefis High Quality Portfolio, consisting of 30 stocks, has shown consistent outperformance compared to the S&P 500, offering better returns with less risk for investors. With a focus on quality stocks and performance metrics, the portfolio may provide valuable insights for investors looking to make informed investment decisions in the current market environment.
