Today we’re going to take a look at the well-established Prudential plc (LON:PRU). The company’s stock saw significant share price volatility over the past couple of months on the LSE, rising to the highs of £19.55 and falling to the lows of £17.2. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Prudential’s current trading price of £17.21 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Prudential’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What’s the opportunity in Prudential?Good news, investors! Prudential is still a bargain right now. According to my valuation, the intrinsic value for the stock is £23.13, but it is currently trading at UK£17.21 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Prudential’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
Can we expect growth from Prudential?Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 93.56% over the next couple of years, the future seems bright for Prudential. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? Since PRU is currently undervalued, it may be a great time to increase your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on PRU for a while, now might be the time to enter the stock. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy PRU. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Prudential. You can find everything you need to know about Prudential in the latest infographic research report. If you are no longer interested in Prudential, you can use our free platform to see my list of over 50 other stocks with a high growth potential.