| Prudential plc (GB0007099541) | |||
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| 15.04.25 12:41:23 | Prudential plc (PUK): Among the Best Performing Stocks in Europe |  |
| We recently published a list of 11 Top Performing European Stocks So Far In 2025. In this article, we are going to take a look at where Prudential plc (NYSE:PUK) stands against other best performing European stocks to invest in. The world economy is hanging by a thread, as the macroeconomic environment consists of trade wars, retaliatory tariffs, and political unrest in Ukraine and the Middle East. It adds to economic uncertainty, with market experts offering cautious economic forecasts. According to EY, the euro area will experience a modest economic turnaround in 2025, and growth is expected to increase from 0.7% last year to 1.3% and 1.8% in 2025 and 2026, respectively. It is forecasted to simmer down to 1.4% in 2027. Among all European countries, Malta is projected to experience the highest GDP growth in 2025 at 4%. EY expects soft employment growth across Europe, driven by demographic challenges and subdued labor demand. Unemployment will likely remain at 2024 levels. While nominal wage this year will clock in higher than pre-pandemic levels, wage growth will take a hit. Central and Eastern European countries are forecasted to experience relatively higher inflation in 2025, while the overall rate remains just over 2% in the euro area. Meanwhile, German economic institutes have slashed their growth projections for 2025 to 0.1% from the previous forecast of 0.8% in September 2024. This revised estimate does not incorporate the recent tariffs levied by the US. These tariffs will be a major setback for European economies, possibly toppling them over the edge of recession for the third consecutive year. The new conservative government declared a €500 billion fund to improve infrastructure and defence and stimulate growth. The fiscal package enhances the economic outlook for 2026 and 2027. However, as the United States is feeling the pressure from high valuations and growing political instability, analysts are looking towards Europe as a better bet for stock investors. Analysts point towards Europe offering a more stable outlook, with lower stock prices, clearer policy direction, and even potential interest rate cuts on the horizon. Investors seem to be shifting their focus, partly because the threat of US tariffs on Europe, especially on automobiles, feels less uncertain now that details are clearer. There is also less exposure to tech in Europe, which is seen as a good thing right now. Europe’s markets, with just 10% tech exposure in the Europe 600 compared to 30% in the broader market, look more balanced. With solid earnings, rising share buybacks, and cheaper stock valuations, investors are turning to Europe. Experts suggest that European and UK markets now have their best shot in years at outperforming the US. With that in mind, let’s take a look at the best-performing stocks in Europe so far in 2025. Story Continues Prudential plc (PUK): Among the Best Performing Stocks in Europe Close up of a handshake between two individuals, showing the trust and reliability of life insurance. Our Methodology To compile our list of the top performing European stocks this year, used the Finviz screener, applying filters for the region and a market cap of over 10 billion to identify stable European companies. Next, we applied a performance filter and selected 11 European stocks with the highest YTD share price growth as of April 11. We have also mentioned the Q4 2024 hedge fund sentiment around the holdings for further insight. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here). Prudential plc (NYSE:PUK) Number of Hedge Fund Holders: 10 YTD Share Price Performance as of April 11: 24.46% Prudential plc (NYSE:PUK) is a multinational insurance and asset management company that is headquartered in both London and Hong Kong. Some of PUK’s services include general insurance, health insurance, vehicle insurance, travel insurance, home insurance, and life insurance. It is one of the best performing stocks in Europe so far in 2025. On February 13, UBS analysts maintained a Buy rating on Prudential plc (NYSE:PUK) with a price target of £12.70 after the announcement that it might publicly list its Indian asset management business, IPAMC. This could unlock significant value, with proceeds potentially going to shareholders. For full-year 2024, Prudential plc (NYSE:PUK)’s new business profit increased 11% to $3.08 billion. While growth was flat for the year due to the broader economy, PUK recorded a 10% rise in adjusted operating profit to $3.13 billion, and EPS climbed 8% to $0.897. The company concluded a $1.05 billion share repurchase plan and lifted its dividend by 13% to $0.2313 per share, bringing total shareholder returns for the year to $1.4 billion. According to Insider Monkey’s fourth quarter database, 10 hedge funds reported owning stakes in Prudential plc (NYSE:PUK), compared to 12 funds in the preceding quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital was the biggest stakeholder of the company, with 1.05 million shares worth $16.75 million. Overall, PUK ranks 5th among the 11 Top Performing European Stocks So Far In 2025. While we acknowledge the potential of European stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than PUK but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey. View Comments |
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| 11.04.25 05:03:04 | We Ran A Stock Scan For Earnings Growth And Prudential (LON:PRU) Passed With Ease |  |
| It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up. In contrast to all that, many investors prefer to focus on companies like Prudential (LON:PRU), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Prudential with the means to add long-term value to shareholders. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. How Fast Is Prudential Growing Its Earnings Per Share? Even modest earnings per share growth (EPS) can create meaningful value, when it is sustained reliably from year to year. So it's easy to see why many investors focus in on EPS growth. Prudential's EPS shot up from US$0.62 to US$0.88; a result that's bound to keep shareholders happy. That's a commendable gain of 42%. Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. EBIT margins for Prudential remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 11% to US$12b. That's progress. The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.LSE:PRU Earnings and Revenue History April 11th 2025 See our latest analysis for Prudential While we live in the present moment, there's little doubt that the future matters most in the investment decision process. So why not check this interactive chart depicting future EPS estimates, for Prudential ? Are Prudential Insiders Aligned With All Shareholders? Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. Of course, we can never be sure what insiders are thinking, we can only judge their actions. The good news is that Prudential insiders spent a whopping US$1.0m on stock in just one year, without so much as a single sale. Buying like that is a fantastic look for the company and should rouse the market in anticipation for the future. We also note that it was the CEO & Executive Director, Anil Wadhwani, who made the biggest single acquisition, paying UK£620k for shares at about UK£7.38 each. Story Continues Along with the insider buying, another encouraging sign for Prudential is that insiders, as a group, have a considerable shareholding. With a whopping US$45m worth of shares as a group, insiders have plenty riding on the company's success. That's certainly enough to let shareholders know that management will be very focussed on long term growth. While insiders are apparently happy to hold and accumulate shares, that is just part of the big picture. The cherry on top is that the CEO, Anil Wadhwani is paid comparatively modestly to CEOs at similar sized companies. Our analysis has discovered that the median total compensation for the CEOs of companies like Prudential, with market caps over US$8.0b, is about US$6.7m. Prudential's CEO took home a total compensation package worth US$5.8m in the year leading up to December 2024. That is actually below the median for CEO's of similarly sized companies. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. Generally, arguments can be made that reasonable pay levels attest to good decision-making. Does Prudential Deserve A Spot On Your Watchlist? For growth investors, Prudential's raw rate of earnings growth is a beacon in the night. Not only that, but we can see that insiders both own a lot of, and are buying more shares in the company. These things considered, this is one stock worth watching. While we've looked at the quality of the earnings, we haven't yet done any work to value the stock. So if you like to buy cheap, you may want to check if Prudential is trading on a high P/E or a low P/E , relative to its industry. There are plenty of other companies that have insiders buying up shares. So if you like the sound of Prudential, you'll probably love this curated collection of companies in GB that have an attractive valuation alongside insider buying in the last three months. Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. View Comments |
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| 21.03.25 07:00:26 | Prudential PLC (PUK) (FY 2024) Earnings Call Highlights: Strong Growth in New Business Profit ... | |
| Release Date: March 20, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Positive Points Prudential PLC (NYSE:PUK) reported an 11% increase in new business profit, reaching $3.1 billion, aligning with their guidance. The company achieved a compounded annual growth rate of 21% in new business profit over the past two years. Prudential PLC (NYSE:PUK) generated $2.6 billion in free surplus last year, indicating strong financial health. The company announced a 13% increase in dividends per share, alongside a $2 billion share buyback program accelerated to complete by the end of 2025. Prudential PLC (NYSE:PUK) is well-positioned to capture growth opportunities in fast-growing markets like China, India, Indonesia, and Malaysia, with GDP growth expected around 5% or more in 2025. Negative Points Gross operating free surplus generation was down 2% over the year, reflecting challenges in maintaining surplus growth. The company's net negative variances, although improved, still amounted to $299 million, indicating ongoing operational challenges. In Malaysia, new business profit was down 4% due to a shift in channel mix towards Bancassurance, affecting margins. Customer sentiment in Vietnam remains challenged, impacting Prudential PLC (NYSE:PUK)'s market position despite efforts to build quality business. The Mainland China capital position remains a focus, with strategic asset allocation and distribution adaptation needed to manage risks. Q & A Highlights Warning! GuruFocus has detected 5 Warning Sign with PUK. Q: Can you elaborate on the strategic initiatives that are driving the growth in new business profit and free surplus? A: Anil Wadhwani, CEO, explained that the company's strategy focuses on writing high-quality new business, particularly in Health and Protection, and enhancing operational efficiency. This includes improving customer experience, managing claims, and investing in technology to boost agent productivity. These efforts have resulted in an 11% increase in new business profit and a compounded annual growth rate of 21% over the past two years. Q: How is Prudential leveraging AI and technology in its operations? A: Anil Wadhwani highlighted that AI is transforming customer and agent interactions, impacting health businesses, policy underwriting, servicing, and claims cost management. The company is investing in technology to enhance agent experience and productivity, which has led to a 5% growth in new business profit per active agent. Q: What are the expectations for capital generation and shareholder returns in the coming years? A: Benjamin Bulmer, CFO, stated that 2025 is expected to be an inflection point for growth in free surplus. The company aims to generate at least $4.4 billion in free surplus by 2027. Prudential has announced over $600 million in dividends for 2024 and is accelerating its $2 billion share buyback program to complete by the end of 2025. Story Continues Q: Could you provide more details on the potential IPO of the Indian Asset Management business? A: Anil Wadhwani mentioned that Prudential is evaluating a potential listing of its Indian Asset Management business, which would involve a partial divestment of shares. This move is subject to approvals and market conditions, with the intention to return net proceeds to shareholders. Q: How is Prudential addressing the challenges in its Malaysian market? A: Anil Wadhwani noted that the company is revitalizing its Agency distribution channel in Malaysia by focusing on next-generation agents and developing agent leaders. Despite challenges, Bancassurance performed well through effective collaboration with strategic bank partners. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. View Comments |
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| 20.03.25 08:36:06 | Prudential posts 11% profit growth in 2024, eyes over 10% growth in 2025 | |
| Prudential posts 11% profit growth in 2024, eyes over 10% growth in 2025 Investing.com -- UK-based financial services group Prudential PLC (LON:PRU) on Thursday reported its full-year 2024 financial results, indicating growth and progress towards its 2027 strategic objectives. The company's new business profit rose by 11% to $3,078 million, while its operating free surplus from in-force insurance and asset management business remained steady at $2,642 million. Prudential's adjusted operating profit before tax saw a 10% increase to $3,129 million, and the adjusted operating profit after tax rose by 7% to $2,582 million, the company said in a statement, adding that its earnings per share based on the adjusted operating profit were 89.7 cents per share, an 8% increase from 2023. The company's Group EEV equity stood at $44.2 billion, and it maintained a strong capital position with a free surplus ratio of 234%. It completed $1,045 million in share buybacks under its $2 billion program announced in June 2024, which is now expected to finish by the end of 2025. Prudential's total dividend for 2024 was 23.13 cents per share, a 13% increase, and the total shareholder returns for FY24 were $1.4 billion. The company also announced its 2024 second interim dividend of 16.29 US cents per ordinary share. Looking ahead to 2025, Prudential expects to grow its new business profit, basic earnings per share based on adjusted operating profit, and operating free surplus generated from in-force insurance and asset management business by more than 10%. The company also anticipates a minimum 10% increase in the dividend per share. Prudential is confident in achieving its 2027 financial and strategic objectives, aiming to generate sustainable value for its shareholders and other stakeholders. "In our view, the most important development is that Prudential is guiding to >10% growth in 2025 for all key metrics; new business profit, operating profit, free surplus, and dividend. Further, the ongoing $2bn buyback has been accelerated, with management expecting to complete this in 2025, rather than 2026," Jefferies analysts said in a note. Seperately, the company on Thursday also announced its intention to establish a joint venture with India's Vama Sundari Investments (Delhi) Private Limited, part of the HCL Group, to launch a standalone health insurance operation in the country. The joint venture, contingent on regulatory approval, will see Prudential Group Holdings Limited, a subsidiary of Prudential plc, acquire a 70% stake, while Vama will retain the remaining 30%, the firm said in a separate press release. Story Continues Related Articles Prudential posts 11% profit growth in 2024, eyes over 10% growth in 2025 Exclusive-Air India in talks for dozens of new widebody jets from Airbus, Boeing, sources say Indonesia stocks higher at close of trade; IDX Composite Index up 1.19% View Comments |
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| 19.03.25 22:26:36 | Prudential's 2024 profit rises on strong Asia-Africa growth, more agents | |
| (Reuters) -Prudential PLC posted a rise in adjusted operating profit before tax for fiscal 2024 on Thursday, as the Asia-focused insurer benefited from strong performance across business segments in Asia and Africa. The London and Hong Kong dual-listed company also benefited from an uptick in its agent count to 67,000 in the second half of 2024, from 63,000 in the first half. The insurer additionally attributes the earnings rise to improved cash flow for new business, better health claims management and advancements in IT infrastructure. The company posted an adjusted operating profit before tax of $3.13 billion for the 12 months ended December 31, which is an 8% increase on an actual exchange rate basis and an 11% increase on a constant exchange rate basis compared with the previous year. Prudential's bancassurance new business profit increased by 12% on a constant exchange rate basis, while the company reported a total new business profit of $3.08 billion, up 11% from the previous year. The company also declared a second interim cash dividend of 16.29 cents apiece, and a total 2024 dividend of 23.13 cents per share. (Reporting by Adwitiya Srivastava in Bengaluru; Editing by Vijay Kishore) View Comments |
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| 19.03.25 05:19:12 | Investors who have held Prudential (LON:PRU) over the last three years have watched its earnings decline along with their investment | |
| While not a mind-blowing move, it is good to see that the Prudential plc (LON:PRU) share price has gained 22% in the last three months. But that doesn't help the fact that the three year return is less impressive. After all, the share price is down 31% in the last three years, significantly under-performing the market. On a more encouraging note the company has added UK£1.1b to its market cap in just the last 7 days, so let's see if we can determine what's driven the three-year loss for shareholders. Check out our latest analysis for Prudential To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS). Prudential saw its EPS decline at a compound rate of 33% per year, over the last three years. This fall in the EPS is worse than the 12% compound annual share price fall. So, despite the prior disappointment, shareholders must have some confidence the situation will improve, longer term. You can see how EPS has changed over time in the image below (click on the chart to see the exact values).LSE:PRU Earnings Per Share Growth March 19th 2025 We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. It might be well worthwhile taking a look at our freereport on Prudential's earnings, revenue and cash flow. What About Dividends? It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of Prudential, it has a TSR of -28% for the last 3 years. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence! A Different Perspective Prudential shareholders gained a total return of 1.7% during the year. But that return falls short of the market. But at least that's still a gain! Over five years the TSR has been a reduction of 1.1% per year, over five years. It could well be that the business is stabilizing. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For example, we've discovered 1 warning sign for Prudential that you should be aware of before investing here. Story Continues Prudential is not the only stock insiders are buying. So take a peek at this freelist of small cap companies at attractive valuations which insiders have been buying. Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on British exchanges. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. View Comments |
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| 04.03.25 09:35:15 | Prudential Is Said to Seek $12 Billion Value on India JV Listing | |
| (Bloomberg) -- Follow Bloomberg India on WhatsApp for exclusive content and analysis on what billionaires, businesses and markets are doing. Sign up here. Most Read from Bloomberg How Upzoning in Cambridge Broke the YIMBY Mold Remembering the Landscape Architect Who Embraced the City NYC Office Buildings See Resurgence as Investors Pile Into Bonds Hong Kong Joins Global Stadium Race With New $4 Billion Sports Park US Tent Facility is Holding Migrant Families Longer Than Recommended Prudential Plc is considering seeking a valuation of about $12 billion for ICICI Prudential Asset Management Co. in a potential initial public offering of the Indian unit, according to people familiar with the matter. Prudential may seek to file an initial draft prospectus for the Mumbai IPO as soon as May, the people said, asking not to be identified because the deliberations aren’t public. Bloomberg News reported on Feb. 13 that Prudential has hired Citigroup Inc. to help work on a possible IPO that could raise about $1 billion. Prudential has said it’s evaluating a listing of the asset management business that would involve a partial divestment of its holding and returning the proceeds to shareholders. Discussions are ongoing and may not lead to a share sale, the people said. A representative for Prudential declined to comment while ICICI didn’t respond to a request seeking comment. ICICI Prudential Asset Management is jointly owned by India’s second largest-private sector lender ICICI Bank Ltd. and UK-based insurer Prudential. Most Read from Bloomberg Businessweek Rich People Are Firing a Cash Cannon at the US Economy—But at What Cost? The Mysterious Billionaire Behind the World’s Most Popular Vapes Snack Makers Are Removing Fake Colors From Processed Foods The US Is Withdrawing From Global Health at a Dangerous Time Trump’s SALT Tax Promise Hinges on an Obscure Loophole ©2025 Bloomberg L.P. View Comments |
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| 18.02.25 04:58:07 | ICICI Is Said to Weigh Buying Additional Stake in Prudential JV | |
| (Bloomberg) -- Follow Bloomberg India on WhatsApp for exclusive content and analysis on what billionaires, businesses and markets are doing. Sign up here. Most Read from Bloomberg Why Barcelona Bought the Building That Symbolizes Its Housing Crisis Progressive Portland Plots a Comeback Por qué Barcelona compró el edificio que simboliza su crisis inmobiliaria A Filmmaker’s Surreal Journey Into His Own Private Winnipeg How to Build a Neurodiverse City ICICI Bank Ltd. is considering buying additional shares in India’s ICICI Prudential Asset Management Co. ahead of a potential listing of the business, according to people familiar with the matter. The Indian private sector lender may seek to buy about 3% in the venture from its partner Prudential Plc, the people said, asking not to be identified because the deliberations are private. A potential stake purchase may take place ahead of the initial public offering of ICICI Prudential and help set the valuation of the business, the people said. A deal would allow ICICI to keep its 51% shareholding in the asset manager after it gives a 3% stake to its employees under an existing stock options plan, the people said. A controlling stake would allow ICICI to both comply with local regulations and consolidate the stake into its accounts, they said. Considerations are ongoing and no final decisions have been made, they added. A representative for ICICI Bank didn’t respond to a request seeking comment, while Prudential declined to comment. ICICI Prudential Asset Management is jointly owned by ICICI Bank and UK-based insurer Prudential. Prudential last week said that it was evaluating a listing of the asset management business that would involve a partial divestment of its holding and returning the proceeds to shareholders. ICICI Bank has said it plans to retain its majority stake. Prudential has hired Citigroup Inc. as the arranger for a potential initial public offering, Bloomberg News has reported. It has added ICICI Securities Ltd. to help on the share sale, the people said. A representative for ICICI Securities declined to comment. Most Read from Bloomberg Businessweek The Undocumented Workers Who Helped Build Elon Musk’s Texas Gigafactory The Unicorn Boom Is Over, and Startups Are Getting Desperate Japan Perfected 7-Eleven. Why Can’t the US Get It Right? The NBA Has Fallen Into an Efficiency Trap How Silicon Valley Swung From Obama to Trump ©2025 Bloomberg L.P. View Comments |
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| 13.02.25 06:22:59 | Prudential Is Said to Hire Citigroup for $1 Billion India IPO | |
| (Bloomberg) -- Prudential Plc has hired Citigroup Inc. to help work on a potential initial public offering of Indian unit ICICI Prudential Asset Management Co., according to people familiar with the subject. Most Read from Bloomberg Why American Mobility Ground to a Halt Saudi Arabia’s Neom Signs $5 Billion Deal for AI Data Center SpaceX Bid to Turn Texas Starbase Into City Is Set for Vote in May Cutting Arena Subsidies Can Help Cover Tax Cuts, Think Tank Says A listing could raise about $1 billion, the people said, asking not to be identified because the matter is private. Preparations are preliminary and details could change, the people said, adding that other banks are likely to join. A Citigroup representative declined to comment and ICICI didn’t respond to a query on the IPO. Prudential didn’t immediately reply to requests for comment. ICICI Prudential Asset Management is jointly owned by India’s second largest-private sector lender ICICI Bank Ltd. and UK-based insurer Prudential. Prudential said Wednesday it was evaluating a listing of the asset management business that would involve a partial divestment of its holding and returning the proceeds to shareholders. Prudential’s shares closed at a seven-month high following the announcement. ICICI Bank has said it plans to retain its majority stake. About $20 billion was raised in Indian IPOs last year, including a record-breaking listing by Hyundai Motor Co.’s local business, making it the world’s second-busiest market after the US. Beyond a possible listing of its India venture, Prudential is considering options for asset manager Eastspring Investments, including selling a minority stake to help broaden the business, Bloomberg News has reported. Prudential shares have risen 13% this year through Wednesday, valuing the company at about $24 billion. Most Read from Bloomberg Businessweek The Game Changer: How Ely Callaway Remade Golf Elon Musk’s DOGE Is a Force Americans Can’t Afford to Ignore How Oura’s Smart Ring Bridged the Gap From Tech Bros to Normies Why Fast Food Could Be MAHA’s Next Target Trump’s Tariffs Make Currency Trading Cool Again After Years of Decline ©2025 Bloomberg L.P. View Comments |
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| 05.02.25 09:37:00 | Prudential plc's (LON:PRU) Stock Is Rallying But Financials Look Ambiguous: Will The Momentum Continue? | |
| Prudential (LON:PRU) has had a great run on the share market with its stock up by a significant 6.9% over the last month. However, we wonder if the company's inconsistent financials would have any adverse impact on the current share price momentum. In this article, we decided to focus on Prudential's ROE. ROE or return on equity is a useful tool to assess how effectively a company can generate returns on the investment it received from its shareholders. In other words, it is a profitability ratio which measures the rate of return on the capital provided by the company's shareholders. View our latest analysis for Prudential How Do You Calculate Return On Equity? Return on equity can be calculated by using the formula: Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for Prudential is: 5.5% = US$947m ÷ US$17b (Based on the trailing twelve months to June 2024). The 'return' is the yearly profit. That means that for every £1 worth of shareholders' equity, the company generated £0.05 in profit. What Has ROE Got To Do With Earnings Growth? So far, we've learned that ROE is a measure of a company's profitability. We now need to evaluate how much profit the company reinvests or "retains" for future growth which then gives us an idea about the growth potential of the company. Assuming all else is equal, companies that have both a higher return on equity and higher profit retention are usually the ones that have a higher growth rate when compared to companies that don't have the same features. Prudential's Earnings Growth And 5.5% ROE At first glance, Prudential's ROE doesn't look very promising. We then compared the company's ROE to the broader industry and were disappointed to see that the ROE is lower than the industry average of 14%. Therefore, it might not be wrong to say that the five year net income decline of 21% seen by Prudential was probably the result of it having a lower ROE. We believe that there also might be other aspects that are negatively influencing the company's earnings prospects. For instance, the company has a very high payout ratio, or is faced with competitive pressures. From the 21% decline reported by the industry in the same period, we infer that Prudential and its industry are both shrinking at a similar rate.LSE:PRU Past Earnings Growth February 5th 2025 Earnings growth is an important metric to consider when valuing a stock. The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in. By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. Is Prudential fairly valued compared to other companies? These 3 valuation measures might help you decide. Story Continues Is Prudential Efficiently Re-investing Its Profits? Looking at its three-year median payout ratio of 33% (or a retention ratio of 67%) which is pretty normal, Prudential's declining earnings is rather baffling as one would expect to see a fair bit of growth when a company is retaining a good portion of its profits. So there could be some other explanations in that regard. For instance, the company's business may be deteriorating. Additionally, Prudential has paid dividends over a period of at least ten years, which means that the company's management is determined to pay dividends even if it means little to no earnings growth. Upon studying the latest analysts' consensus data, we found that the company is expected to keep paying out approximately 27% of its profits over the next three years. Still, forecasts suggest that Prudential's future ROE will rise to 13% even though the the company's payout ratio is not expected to change by much. Summary On the whole, we feel that the performance shown by Prudential can be open to many interpretations. Even though it appears to be retaining most of its profits, given the low ROE, investors may not be benefitting from all that reinvestment after all. The low earnings growth suggests our theory correct. That being so, the latest industry analyst forecasts show that the analysts are expecting to see a huge improvement in the company's earnings growth rate. To know more about the company's future earnings growth forecasts take a look at this freereport on analyst forecasts for the company to find out more. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. View Comments |
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