Prudential Financial Trades at a Discount: Time to Load Up or Hold Off?

Shares of Prudential Financial, Inc. PRU are trading at a discount compared to the Zacks Insurance - Multi line industry. Its forward price-to-earnings of 7.11X is lower than its five-year median of 7.92 and the industry average of 8.86X. The insurer has a Value Score of B. Image Source: Zacks Investment ResearchHowever, shares of other insurers like Horace Mann Educators Corporation HMN and Assurant, Inc. AIZ are trading at a multiple higher than the industry average. Horace Mann Educatorsis trading at 10.26 and Assurant is trading at 10.96. However, Everest Group, Ltd. EG shares are trading at a discount of 6.09.Price Performance of PRUShares of  Prudential have lost 12.9% year to date, underperforming its industry, the Finance sector, and the Zacks S&P 500 Composite’s growth of 5.9%, 14.6% and 14.1% respectively, in the same time frame.The insurer has a market capitalization of $36.4 billion. The average volume of shares traded in the last three months was 1.6 million. Image Source: Zacks Investment ResearchProjections for PRUThe Zacks Consensus Estimate for 2025 revenues is pegged at $55.8 billion, down 18% year over year. The consensus estimate for PRU’s current-year earnings is pegged at $13.69 per share, up 8.5% from the year-ago reported figure. The consensus estimate for 2026 earnings per share and revenues indicates an increase of 8.3% and 4.3%, respectively, from 2025 estimates. The expected long-term earnings growth rate is pegged at 7.5%.Optimistic Analyst Sentiment on PRUThe Zacks Consensus Estimate for 2025 and 2026 earnings has moved up 0.4% and 0.2% over the past month, respectively. Image Source: Zacks Investment ResearchAverage Target Price for PRU Suggests UpsideBased on short-term price targets offered by 15 analysts, the Zacks average price target is $116.13 per share. The average suggests a potential 12.8% upside from the last closing price. Image Source: Zacks Investment ResearchKey Points to Note for PRUPrudential Financial is steadily building on its strengths by leaning on organic drivers that reinforce long-term growth. Its asset-based businesses continue to provide a solid foundation, while international operations and a stronger Group Insurance segment are adding momentum. Backed by a wide distribution reach and diverse product portfolio, Prudential Financial is positioning itself as a business that is less market-sensitive and better equipped for sustainable expansion.Strengthening this base, Prudential Financial is advancing sustainable, profitable growth by sharpening its strategy and execution. The integration of PGIM’s multi-manager model into a $1 trillion public and private credit platform enhances efficiency, expands cross-selling opportunities and supports stronger revenue generation.Prudential Financial’s global reach is also shaping its growth story, with international markets adding layers of resilience and opportunity. Japan remains a cornerstone, where steady demand for protection and retirement products has translated into consistently strong returns. Brazil, now operating at a critical scale, is poised to drive earnings more meaningfully, while the entry into Malaysia opens a promising market defined by low insurance penetration and long-term expansion potential.Alongside its global and strategic initiatives, Prudential Financial is sustaining strong momentum in the United States, posting $12 billion in second-quarter sales from Institutional and Individual Retirement Strategies. Solid recurring premium growth and scale are enabling the company to maintain its position among the top five individual life insurers and steadily expand its market presence.Headwinds Faced by PRUEven with solid progress across its businesses, Prudential Financial faces several challenges. Prolonged low interest rates, softness in the group disability segment and rising expenses are weighing on margin expansion, tempering some of the gains from its strategic and international initiatives.The pressure on margins is further compounded by Prudential Financial’s exposure to products like annuities and universal life, which guarantee minimum returns. Low interest rates have intensified this strain by increasing liability values and forcing additional reserve build-up, weighing on overall results.Prudential Financial’s rising debt adds another layer of pressure. By June 30, 2025, total debt had risen to $20.9 billion, increasing the debt-to-equity ratio to 39.32%, surpassing the industry average of 34.16%. The higher debt burden is increasing interest expenses, while a return on invested capital of just 1.02%, well below the industry benchmark of 2%, highlights potential inefficiencies that could limit future returns.Wealth Distribution of PRUPrudential Financial continues to prioritize shareholder value through consistent capital returns. Over the past five years, the company has raised its dividend five times, achieving 4.27% growth in payouts. In December 2024, the board approved a $1 billion share buyback program, with $500 million still available under the current authorization.ConclusionOverall, Prudential Financial’s strong organic drivers, strategic initiatives, and international growth provide a solid foundation for sustainable expansion. However, low interest rates, margin pressures, and rising debt pose challenges that could temper near-term performance.Given its unfavorable ROIC and price underperformance, it is better to wait for some more time before taking a call on this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Free Report: Profiting from the 2nd Wave of AI ExplosionThe next phase of the AI explosion is poised to create significant wealth for investors, especially those who get in early. It will add literally trillion of dollars to the economy and revolutionize nearly every part of our lives.Investors who bought shares like Nvidia at the right time have had a shot at huge gains.But the rocket ride in the "first wave" of AI stocks may soon come to an end. The sharp upward trajectory of these stocks will begin to level off, leaving exponential growth to a new wave of cutting-edge companies.Zacks' AI Boom 2.0: The Second Wave report reveals 4 under-the-radar companies that may soon be shining stars of AI’s next leap forward.Access AI Boom 2.0 now, absolutely free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Prudential Financial, Inc. (PRU): Free Stock Analysis Report Assurant, Inc. (AIZ): Free Stock Analysis Report Horace Mann Educators Corporation (HMN): Free Stock Analysis Report Everest Group, Ltd. (EG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks