$PRU Prudential Financial – Subscriber Series Request

$PRU Prudential Financial – Subscriber Series Request



hello everyone this Chuck Carnivale co-founder fast graphs the fundamentals analyzer software tool with this particular video I'm gonna cover not just Prudential Financial which is obviously going to be the stock that I'm going to use but I also want to make some notes of what's been happening in the general financial sector with insurance carriers along the way here what I want you to notice is that coming into the Great Recession if you look at Prudential here I want you to notice that the market was valuing the stock at around a 15 PE that's the multiple of the orange line on this graph this is the theoretical fair value multiple by using one of our formulas but I want you to notice that's coming out of the Great Recession I want you to focus on the normal multiple or the best fit line if you will and notice that the market has valued their stock at around 11 multiple now keep in mind these valuation preferences are never perfect they're meant to give you a thing to measure and think again so if I shorten the graph here I'm just coming out of the Great Recession I want you to notice that Principal Financial Group has been trading at about nine point three times earnings here operating earnings and it hasn't even got near the fifteen so the market place has is telling us that perhaps that because of the financial debacle the fact that all the earnings results of May the major financial companies collapse because they were investing in this toxic paper and they were you know participating in the loose money that actually took us into the Great Recession so we've had this kind of reset so if you look at companies like Prudential you'll see that you know there recently trading that we'll call it a nine to twelve multiple maybe ten eleven multiple would be what I would think I think if it really is a ten multiple quite frankly so you know looking at it with a blended p/e of eight point three nine and a three point nine percent current dividend you know I've got an a rated company with 21 percent debt the capital which is very good now they were participating in that toxic you know free money era coming in that probably stimulated the Great Recession so when I look at their performance I do want you to notice that they did slash their dividend during the Great Recession by almost by half really but but then once they started paying a dividend again and they grew and it took them two years to get back to their previous high dividend and their dividends been growing quite nicely ever since now the company has outperformed the S&P 500 on total cumulative and dividend income going back to 2001 and it's outperformed it on a total return six point six percent capital appreciation basis six point six versus five point six percent for a total return of eight percent versus six and a half in the SP so it has been a non performer now if I shorten this time frame and look at the great you know coming out of the Great Recession has I did a minute ago I want to point out that this has been a great time for the sp500 so here we're looking at comparing one of the best performance decades if you will for the S&P 500 and see how Prudential stood up to that and you'll see that a ten thousand dollar investment on December 31st 2008 would have grown to thirty three thousand eight hundred fifty nine dollars pretty much a dead heat with the S&P just slightly outperformed it but it did produce almost twice as much dividend income so we get a full percentage point advantage over the general market that's measured by the SP and I want to keep in mind that that's accomplished that by trading at a very low multiple the SP trades at a very high multiple right now in contrast so now if I look at going forward and look at what this company is capable of doing if I utilize that 15 PE you know they're the future rates of return here if it does ever revert back to that bean if the market let's say forgives the financials and it gets back there the rates of return going forward could be extraordinary but if I use that normal multiple and I'm gonna pick that roughly ten this is nine point five eight I've got you know fifty-one percent annualized coming out by the end of the year but if I go out a year and a half I've got a twenty three percent annualized rate of return and if I go all the way up to 2021 I've got an eighteen percent rate of return and this is the narrated company with a 3.9 percent dividend yield and the fact that they did cut their dividend during the Great Recession in half is also functionally related to what I would call that aberration that they were participating in with freed money but otherwise they've got really a good dividend record and so this is one that I think dividend growth investors might want to take a close look at I will just very quickly here I recently did an article on Principal Financial Group I just want to show you a cup of other companies in the financial industry just to give you a perspective that we've got the same kind of undervaluation issue going on here's the Principal Financial Group you know normal evaluations coming into the Great Recession trading at a much lower p/e if I go to that thirteen that I did with Prudential you can see it's about a ten PE again another one that you might want to take a quick look at would be Aflac now I'm not going to get into much more in these videos you I just wanted to point out that these financial companies right now are currently being valued at these lower Tennessee p/e ratios by the market so when you're looking at financials today you want to take into consideration that the market has been discounting their evaluations it's coming out of the Great Recession and before you make an investment you want to consider like Aflac maybe a little overvalued on that regard but what I just showed you with Principal Financial Group and Prudential those stocks look very attractive at this level anyway this has been Chuck Carmel saying it thanks for watching I wanted to give you a little perspective that the financial sector is being you know you have to kind of reset your view of what fair valuation is if you like this video and get Philly you got benefit out of it don't forget to hit our subscribe button below thanks again for watching

8 thoughts on “$PRU Prudential Financial – Subscriber Series Request

  1. I have been watch listing PRU and PFG for a few months now and consider it a great candidates for a retirement income dividend portfolio. Also, high on my watch list of undervalued financial companies, I am considering CMA and CNO. I would appreciate your review and consideration. Alan (FASTgraph subscriber)

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