Financial services and life insurance company shares Prudential financial (NYSE: PRU) rose 31.3% in the first half, according to data provided by S&P Global Market Intelligence.
Prudential Financial saw its profitability improve after the impacts of the pandemic hurt it last year. The company has taken initiatives to transform its business portfolio while saving $ 750 million in costs by 2023, including $ 400 million this year.
Last year, Prudential was hit hard by the pandemic and as a result recorded a net loss of $ 146 million. This came after a profit of $ 4.1 billion in 2019.
The financial services company was hit by investment losses totaling $ 3.8 billion as well as a 9% drop in premium income from the previous year. Together, that brought total revenue down 12% to $ 57 billion.
But investors are optimistic about signs of a turnaround. In the first quarter, revenue of nearly $ 17 billion was a 26% improvement over the previous year, and net profit was $ 2.8 billion in the quarter after posting a loss of $ 270 million the previous year.
Image source: Getty Images.
Prudential has worked to change its business portfolio and earnings profile, seeking to shift to less market and rate sensitive products. One of these products is FlexGuard, an indexed variable annuity that offers clients different levels of protection and the ability to increase their retirement income. FlexGuard sales reached $ 1.6 billion in the first quarter, up from $ 1.2 billion in the fourth quarter, and represented 84% of its annuity sales.
With this backbone, along with his cost-cutting measures, CEO Charlie Lowrey said, “We expect Prudential Financial to become a higher growth, less market sensitive and more agile company. ”
Prudential Financial is a strong company that is on the right track to recover, and its stocks still appear to be downgraded. It trades relatively inexpensively with a P / E of 15.1 and a futures P / E of 7.6 which makes it look even cheaper. Not only that, but it’s also a great income stock with a 4.55% dividend yield.
Management’s strategic change in its business mix and cost savings helped the stock recover in the first half of the year and are positive signs for shareholders.
10 stocks we prefer over Prudential Financial
When our award-winning team of analysts have stock advice, it can pay off to listen. After all, the newsletter they’ve been running for over a decade, Motley Fool Equity Advisor, has tripled the market. *
They just revealed what they think are the top ten stocks investors can buy right now … and Prudential Financial was not one of them! That’s right – they think these 10 stocks are even better buys.
See the 10 actions
* The portfolio advisor returns on June 7, 2021
Courtney Carlsen has no position in the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.