Analyzing Prudential Financial (NYSE:PRU) & Reinsurance Group of America (NYSE:RGA)
Prudential Financial (NYSE:PRU) and Reinsurance Group of America (NYSE:RGA) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, profitability, institutional ownership, earnings, risk, dividends and analyst recommendations.
Institutional and Insider Ownership
63.7% of Prudential Financial shares are held by institutional investors. Comparatively, 90.8% of Reinsurance Group of America shares are held by institutional investors. 0.8% of Prudential Financial shares are held by insiders. Comparatively, 0.8% of Reinsurance Group of America shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
This is a summary of current ratings and price targets for Prudential Financial and Reinsurance Group of America, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Reinsurance Group of America||1||2||1||0||2.00|
Prudential Financial presently has a consensus price target of $104.61, suggesting a potential upside of 25.16%. Reinsurance Group of America has a consensus price target of $151.50, suggesting a potential upside of 2.46%. Given Prudential Financial’s stronger consensus rating and higher probable upside, equities analysts plainly believe Prudential Financial is more favorable than Reinsurance Group of America.
This table compares Prudential Financial and Reinsurance Group of America’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Reinsurance Group of America||5.85%||9.19%||1.29%|
Earnings & Valuation
This table compares Prudential Financial and Reinsurance Group of America’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Prudential Financial||$58.13 billion||0.58||$4.07 billion||$11.69||7.15|
|Reinsurance Group of America||$12.88 billion||0.72||$715.84 million||$12.12||12.20|
Prudential Financial has higher revenue and earnings than Reinsurance Group of America. Prudential Financial is trading at a lower price-to-earnings ratio than Reinsurance Group of America, indicating that it is currently the more affordable of the two stocks.
Prudential Financial pays an annual dividend of $4.00 per share and has a dividend yield of 4.8%. Reinsurance Group of America pays an annual dividend of $2.80 per share and has a dividend yield of 1.9%. Prudential Financial pays out 34.2% of its earnings in the form of a dividend. Reinsurance Group of America pays out 23.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Prudential Financial has raised its dividend for 10 consecutive years and Reinsurance Group of America has raised its dividend for 8 consecutive years. Prudential Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Volatility & Risk
Prudential Financial has a beta of 1.49, meaning that its stock price is 49% more volatile than the S&P 500. Comparatively, Reinsurance Group of America has a beta of 0.67, meaning that its stock price is 33% less volatile than the S&P 500.
Prudential Financial beats Reinsurance Group of America on 11 of the 18 factors compared between the two stocks.
About Prudential Financial
Prudential Financial, Inc., through its subsidiaries, provides insurance, investment management, and other financial products and services. It operates through PGIM, U.S. Workplace Solutions, U.S. Individual Solutions, and International Insurance divisions. The PGIM division offers an array of asset management and advisory services related to public and private fixed income, public equity and real estate, commercial mortgage origination and servicing, and mutual funds and other retail services to institutional, private, and sub-advisory clients, as well as to insurance company separate accounts, government sponsored entities, and the general account. The U.S. Workplace Solutions division 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 plans and affinity groups. The U.S. Individual Solutions division 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. The International Insurance division develops and distributes individual life insurance, retirement, and related products to the mass affluent and affluent markets in Japan, Korea, and other foreign countries, as well as middle income and mass affluent markets. 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.
About Reinsurance Group of America
Reinsurance Group of America, Incorporated engages in reinsurance business. It offers individual and group life and health insurance products, including term life, credit life, universal life, whole life, group life and health, joint and last survivor insurance, critical illness, disability, and longevity products, as well as asset-intensive and financial reinsurance products. The company also provides reinsurance for mortality, morbidity, lapse, and investment-related risk associated with products; and reinsurance for investment-related risks. In addition, it develops and markets technology solutions; and provides consulting and outsourcing solutions for the insurance and reinsurance industries. The company serves life insurance companies in the United States, Latin America, Canada, Europe, the Middle East, Africa, and the Asia Pacific. Reinsurance Group of America, Incorporated was founded in 1973 and is headquartered in Chesterfield, Missouri.
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