Prudential Financial (PRU): Assessing Valuation After Stock Decline and Strong Preliminary Results

Prudential Financial (PRU) has caught investors' attention after a recent decline in its share price. At the same time, the company disclosed preliminary quarterly results highlighting robust cash flow and above-expectation alternative investment income.

See our latest analysis for Prudential Financial.

Against this backdrop of expansion in key markets like New York and New Jersey, Prudential Financial’s share price has drifted lower in 2025, with a year-to-date decline of 12.8%. Despite short-term jitters and a muted 1-year total shareholder return of -14.85%, the bigger story is still positive. Long-term total shareholder returns remain strong, up nearly 24% over three years and an impressive 99% over five years. This hints at potential value as underlying business momentum continues to build.

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So, after significant weakness in the share price alongside strong fundamentals and an attractive discount to analyst targets, is Prudential Financial offering a genuine bargain, or has the market already factored in future growth?

Most Popular Narrative: 10.9% Undervalued

With Prudential Financial’s last close at $103.13 and the widely-followed narrative placing fair value at $115.71, market sentiment diverges from this more optimistic outlook. The narrative’s fair value is notably shaped by ambitious assumptions, setting the stage for a closer look at the key drivers behind it.

"Demographic changes, particularly an aging population and rising global life expectancy, are creating increased long-term demand for retirement income and insurance solutions. This positions Prudential to grow revenue as the addressable market expands, especially through U.S. and international business lines."

Read the complete narrative.

Can Prudential Financial really capitalize on demographic waves and unlock superior growth? The real suspense lies in the magnitude of margin expansion and profit acceleration priced into this narrative. Which bold forecasting choices push fair value well above current price? Only a look inside reveals the numbers behind this 2028 earnings outlook.

Result: Fair Value of $115.71 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent competition and legacy annuity runoff could undermine Prudential’s ability to deliver on the optimistic earnings and margin outlook reflected in forecasts.

Find out about the key risks to this Prudential Financial narrative.

Another View: Multiples Complicate the Story

Looking at valuation through the lens of earnings multiples leads to a more cautious message. Prudential Financial trades at 22.5 times earnings, which is well above the US insurance industry average of 14.1 and the peer group’s 15.4. The company’s fair ratio, a level the market could move toward, is estimated at 20.3. While strong earnings growth may justify some of this premium, it also injects risk if the company falls short of expectations. Could current optimism be overdone? Or does the premium signal hidden strengths still to play out?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Prudential Financial Narrative

Readers who want to dig deeper or carve out their own perspective can dive in and build a personal view from scratch in just a few minutes. Feel free to Do it your way.

A great starting point for your Prudential Financial research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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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.

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