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1. Company Snapshot

1.a. Company Description

Prudential Financial, Inc., together with its subsidiaries, provides insurance, investment management, and other financial products and services in the United States and internationally.It operates through eight segments: PGIM, Retirement, Group Insurance, Individual Annuities, Individual Life, Assurance IQ, International Businesses, and Closed Block.The company offers investment management services and solutions related to public fixed income, public equity, real estate debt and equity, private credit and other alternatives, and multi-asset class strategies to institutional and retail clients, as well as its general account.


It also provides a range of retirement investment, and income products and services to retirement plan sponsors in the public, private, and not-for-profit sectors; and group life, long-term and short-term group disability, and group corporate-, bank-, and trust-owned life insurance in the United States, primarily to institutional clients for use in connection with employee and membership benefits plans, as well as sells accidental death and dismemberment, and other supplemental health solutions; and provides plan administration services in connection with its insurance coverages.In addition, the company develops and distributes individual variable and fixed annuity products, principally to the mass affluent and affluent markets; and individual variable, term, and universal life insurance products to the mass middle, mass affluent, and affluent markets in the United States.Further, it provides third-party life, health, Medicare, property and casualty, and term life products to retail shoppers through its digital and independent agent channels.


The company offers its products and services to individual and institutional customers through its proprietary and third-party distribution networks.Prudential Financial, Inc.was founded in 1875 and is headquartered in Newark, New Jersey.

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1.b. Last Insights on PRU

Prudential Financial's recent performance was driven by a strong Q1 2025 earnings beat, with adjusted operating income of $1.188 billion ($3.29 per share) surpassing estimates. The company's asset management fees and improved assets under management contributed to the positive results, offset by lower net investment spread results. Additionally, Prudential's solid balance sheet, strong liquidity, and secure 5.3% dividend support a compelling investment case. The company's pivot to more stable, capital-efficient products to capture massive retirement market tailwinds is also a positive development. Furthermore, Prudential's recent expansion of its capital partnership with Affirm, a payment network, through a new revolving pass-through loan sale facility that will invest up to $3 billion over 36 months, is a testament to the company's ability to adapt and grow.

1.c. Company Highlights

2. Prudential's Strong Q3 Earnings Beat Expectations

Prudential's Q3 pretax adjusted operating income came in at $1.9 billion, or $4.26 per share, significantly beating analyst estimates of $3.72 per share. The company's year-to-date adjusted operating return on equity was over 15%, driven by higher spread income and more favorable underwriting experience across its global retirement and insurance businesses, as well as higher fee income in PGIM. The results reflect a strong performance across various business segments, including Retirement Strategies and Group Insurance.

Publication Date: Nov -01

📋 Highlights
  • Record Q3 Pretax Profit: Pretax adjusted operating income reached $1.9 billion ($4.26/share), a 28% increase YoY.
  • ROE Performance: Year-to-date adjusted operating return on equity exceeded 15%, reflecting strong underwriting and spread income.
  • PGIM Growth: Assets under management rose 5% to $1.5 trillion, with $2.4 billion in net inflows (affiliated: $1.8B, third-party: $600M).
  • Japan Business Momentum: Sales increased 4%, with 20% attributable to new products launched in the past two years.
  • Capital Strength: Cash and liquid assets totaled $3.9 billion, surpassing the $3 billion minimum liquidity target.

Business Segment Performance

The company's U.S. businesses produced diversified sources of earnings from fees, net investment spread, and underwriting income. Retirement Strategies continued to have strong momentum, generating $10 billion of sales in the third quarter. PGIM delivered higher asset management fees driven by market appreciation, positive net flows, and strong investment performance, with total net inflows of $2.4 billion.

Capital Position and Growth Initiatives

Prudential's capital position remains strong, with cash and liquid assets of $3.9 billion, above its minimum liquidity target of $3 billion. The company is driving expense efficiencies across the organization, with a target operating expense ratio of 10.5% to 8.5%. Prudential expects to continue making progress towards this target and is investing in growth initiatives, including ETFs, asset-backed finance, and direct lending.

Valuation and Outlook

With a Price-to-Book Ratio of 1.62, Prudential's valuation appears reasonable compared to its peers. The company's Dividend Yield of 5.14% is also attractive, providing a relatively stable source of return for investors. Analysts estimate revenue growth of 2.8% for next year, indicating a moderate pace of growth. Given Prudential's strong capital position, diversified business segments, and growth initiatives, the company is well-positioned to drive future growth and improve profitability.

Risk Management and Private Credit Portfolio

Prudential's private credit portfolio has consistently performed better than public credit during economic downturns, with approximately 90% of its corporate private credit securities being investment grade. The company is evaluating new asset classes, including residential mortgage loans, asset-backed lending, and infrastructure, to further diversify its portfolio.

3. NewsRoom

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Pace selected by Prudential Financial to help automate its insurance operations with agentic AI

Dec -04

Source: businesswire.com

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First Look: Insurers, Auto Rules, AI and Fed Jitters

Dec -04

Source: gurufocus.com

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Prudential Financial Announces Matt Armas as Chief Investment Officer

Dec -03

Source: businesswire.com

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Prudential Advisors Connect mobile app launches, bringing advisor productivity tools to iOS devices, further enhancing the advisor experience

Dec -03

Source: prnewswire.com

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17 dividend-stock bargains from a value manager with a stellar track record

Dec -02

Source: marketwatch.com

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20 Years on Wall Street Taught Me: 5 Large Cap High-Yield Dividend Giants You Never Sell

Dec -01

Source: 247wallst.com

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PGIM Closed-End Funds Declare Distributions for December 2025, January and February 2026

Nov -28

Source: businesswire.com

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Clarkston Capital Partners LLC Has $1.61 Million Holdings in Prudential Financial, Inc. $PRU

Nov -28

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.25%)

6. Segments

U.S. Businesses - Institutional Retirement Strategies

Expected Growth: 5.4%

Prudential Financial, Inc.'s retirement plans for institutions are driven by a growing demand for employee benefits, increasing retirement savings, and a shift towards defined contribution plans, which are expected to fuel growth in this segment.

International Businesses - Life Planner

Expected Growth: 6.5%

Prudential Financial, Inc.'s international life planner services are driven by increasing demand for retirement planning and wealth management solutions, particularly in Asia. The company's diversified distribution channels and expanding digital capabilities will support growth.

International Businesses - Gibraltar Life and Other

Expected Growth: 4.5%

Gibraltar Life and Other international insurance operations from Prudential Financial, Inc. is expected to grow driven by increasing demand for life insurance products, expansion into emerging markets, and strategic partnerships to enhance distribution channels.

U.S. Businesses - Group Insurance

Expected Growth: 4.2%

None

U.S. Businesses - Individual Life

Expected Growth: 4.3%

Increasing demand for term life insurance, growth in the 55-64 age demographic, and Prudential’s strong brand recognition drive growth in the U.S. individual life insurance market.

U.S. Businesses - Individual Retirement Strategies

Expected Growth: 4.5%

Prudential Financial, Inc.’s U.S. retirement strategies are expected to grow due to increasing demand for customized retirement plans, expanding distribution channels, and a growing need for financial security among baby boomers and Gen Xers.

Closed Block Division

Expected Growth: 5.5%

Prudential Financial, Inc.'s Closed Block division growth is expected to be driven by increasing demand for insurance and retirement products, steady economic growth, and effective cost management.

Corporate and Other

Expected Growth: 5.5%

Prudential Financial’s Corporate and Other segment is expected to benefit from a solid capital position, effective risk management, and a diversified business mix, driving growth.

PGIM

Expected Growth: 8.2%

PGIM's growth is driven by increasing demand for ESG and alternatives, expansion into new markets, and strong brand recognition, positioning Prudential Financial, Inc. for long-term success.

Unallocated Other Divested and Run-Off Businesses

Expected Growth: 4.5%

Prudential Financial's divested and discontinued operations are expected to register a moderate growth, driven by the increasing demand for insurance products and the company's strategic divestitures to focus on core operations.

Unallocated Market Experience Updates

Expected Growth: 4.6%

Prudential Financial's unallocated market experience updates drive growth, fueled by increasing demand for insurance and retirement products, as well as strategic investments in digital capabilities and expansion into emerging markets.

Unallocated Equity in Earnings of Operating Joint Ventures and Earnings Attributable to Noncontrolling Interests

Expected Growth: 4.8%

Prudential Financial's unallocated equity in earnings of joint ventures and noncontrolling interests is driven by the insurer's strategic investments in growth markets, particularly in Asia, and its ability to leverage its brand and distribution channels to generate fee-based income.

Unallocated Change in Value of Market Risk Benefits, Net of Related Hedging Gains (Losses)

Expected Growth: 4.6%

Prudential Financial, Inc. is expected to benefit from its market risk management capabilities, driving growth in its insurance and asset management segments. The company's diversification strategy and expansion in Asia will enhance its revenue streams.

Unallocated Realized Investment Gains (Losses), Net, and Related Charges and Adjustments

Expected Growth: 8.2%

Prudential Financial, Inc. benefits from increasing demand, retirement savings, and expansion into international markets, driving investment gains. The company's diversified business model, strong capital position, and strategic acquisitions support its growth momentum.

7. Detailed Products

Term Life Insurance

Provides temporary life insurance coverage for a specified period of time

Permanent Life Insurance

Combines a death benefit with a savings component that grows over time

Universal Life Insurance

Flexible premium policy that combines a death benefit with a savings component

Variable Life Insurance

Combines a death benefit with a separate account that can be invested in various investments

Indexed Universal Life Insurance

Combines a death benefit with a savings component that earns interest based on the performance of a specific stock market index

Retirement Accounts

Tax-deferred savings plans designed to help individuals save for retirement

Annuities

Insurance products that provide a steady income stream for a set period of time or for life

Group Insurance

Insurance products offered through employers to provide coverage to employees

Investment Management

Professional management of investment portfolios

Real Estate Investments

Investments in commercial and residential real estate properties

8. Prudential Financial, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Prudential Financial, Inc. operates in a highly competitive industry, but the threat of substitutes is mitigated by the company's diversified product offerings and strong brand recognition.

Bargaining Power Of Customers

Prudential Financial, Inc. has a large and diversified customer base, which reduces the bargaining power of individual customers. Additionally, the company's products and services are often complex and require specialized knowledge, making it difficult for customers to switch to alternative providers.

Bargaining Power Of Suppliers

Prudential Financial, Inc. has a diverse supplier base, and the company is not heavily dependent on any single supplier. This reduces the bargaining power of suppliers and allows the company to negotiate favorable terms.

Threat Of New Entrants

The financial services industry is heavily regulated, and new entrants face significant barriers to entry. Additionally, Prudential Financial, Inc. has a strong brand and established distribution networks, making it difficult for new entrants to gain traction.

Intensity Of Rivalry

The financial services industry is highly competitive, and Prudential Financial, Inc. faces intense competition from established players. The company must continually innovate and invest in its products and services to remain competitive.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 42.87%
Debt Cost 10.57%
Equity Weight 57.13%
Equity Cost 10.65%
WACC 10.62%
Leverage 75.03%

11. Quality Control: Prudential Financial, Inc. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Momentum: 6.0

Volatility: 9.7

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Yield: 8.0

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A-Score: 5.8/10

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Quality: 5.5

Yield: 8.0

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Volatility: 8.0

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A-Score: 5.5/10

Value: 5.7

Growth: 3.4

Quality: 4.9

Yield: 8.0

Momentum: 2.0

Volatility: 9.0

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Value: 3.0

Growth: 4.2

Quality: 6.7

Yield: 4.0

Momentum: 4.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

110.25$

Current Price

110.25$

Potential

-0.00%

Expected Cash-Flows