Prudential Stock Slips Below 50-Day SMA: What Should You Do Now?

Prudential Financial Inc. PRU has been trading below its 50-day simple moving average (SMA), signaling a short-term bearish trend. The stock’s last traded price, as of Dec. 31, 2024, was $118.53, down 9.2% from its 52-week high of $130.55.The 50-day SMA is a key indicator for traders and analysts to identify support and resistance levels. It is considered particularly important as this is the first marker of an uptrend or downtrend. Prudential Financial has emerged as one of the top five individual life insurance companies in the United States with new recurring premium sales, greater scale, expanded product offerings and broader distribution capabilities. It holds the leading position in universal, term and variable life insurance and expanding Retirement business.Image Source: Zacks Investment ResearchPRU’s Price PerformanceShares of Prudential Financial have rallied 13.4% in a year, outperforming the industry’s 11.6% increase but underperforming the Finance sector’s rise of 20.1% as well as the Zacks S&P 500 composite’s gain of 25.3% in the same time frame.PRU Vs Industry, Sector & S&P in a YearImage Source: Zacks Investment ResearchBased on short-term price targets offered by 15 analysts, the Zacks average price target is $130.47 per share. The average suggests a potential 10.1% upside from Tuesday’s closing price.Optimistic Growth on PRUThe Zacks Consensus Estimate for 2025 earnings is pegged at $14.68, indicating a 10% year-over-year increase. The expected long-term earnings growth rate is pegged at 10.4%.PRU’s Return on CapitalReturn on equity (ROE), reflecting the company’s efficiency in utilizing shareholders' funds, was 15.3% in the trailing 12 months, lower than the industry average of 15.33%. Return on invested capital (ROIC) reflects its efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 1%, lower than the industry average of 2.4%.PRU’s Growth PathPrudential Financial is witnessing huge demand for retirement benefit products for baby boomers, which is expected to continue. The U.S. Census Bureau projects that nearly 25% of the population will be 65 years or older by 2050. Prudential’s vast distribution network, compelling product portfolio and superior brand image will give it a competitive edge. The company intends to be a global leader in expanding its access to invest, insurance and retirement security. It undertakes several strategic initiatives, which poise it well for long-term growth. It continues to invest in the long-term sustainable growth of the business through programmatic acquisitions and partnerships in emerging markets to build scale and complement businesses in support of long-term growth. Prudential Financial has a strong international presence that gives it more organic growth opportunities than its peers. Expanding its international business is vital for long-term growth. Prudential has a strong footprint in Japan, which offers attractive opportunities to capitalize on protection products and retirement needs and has historically generated ROE in the 20% range. Its business in Brazil has gained sufficient scale and should become an important contributor to earnings growth in the international division over the next few years. It has also expanded in Malaysia, which is an attractive market with low life insurance penetration, a well-developed regulatory environment and long-term growth potential.The company’s debt level has been increasing over the last few quarters, with interest expense rising. Its leverage compares unfavorably with the industry average. Times interest earned too compares unfavorably with industry average.Attractive ValuationThe stock is undervalued compared to its industry. It is currently trading at a price-to-earnings multiple of 8.9, lower than the industry average of 10.7 MetLife, Inc. MET shares are trading at a multiple lower than the industry while that of Sun Life Financial Inc. SLF are trading at a multiple higher than the industry.How Should You Play PRU Stock Now?Prudential Financial continues to benefit from its solid asset-based businesses, improved margins in the Group Insurance business and international operations. A high-performing asset management business and deeper reach in the pension risk transfer market are catalysts for long-term growth.  PRU has been increasing its dividend for the past 16 years. The company continues to balance investments in the growth of businesses with returning capital to shareholders.Prudential Financial’s exposure to products like annuities and universal life, which guarantee a minimum return, will strain its capital. Its results have been suffering due to additional reserve accretion required when the low interest rate increases the value of these liabilities. The company expects individual annuities sales to continue to be lower in the near term due to repricing and repositioning of products. Lower sales reflect its pivot to less market-sensitive products.It is better to adopt a wait-and-see approach for this Zacks Rank #3 (Hold) stock now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Just Released: Zacks Top 10 Stocks for 2024Hurry – you can still get in early on our 10 top tickers for 2025. Handpicked by Zacks Director of Research Sheraz Mian, this portfolio has been stunningly and consistently successful. From inception in 2012 through November, 2024, the Zacks Top 10 Stocks gained +2,112.6%, more than QUADRUPLING the S&P 500’s +475.6%. Sheraz has combed through 4,400 companies covered by the Zacks Rank and handpicked the best 10 to buy and hold in 2025. You can still be among the first to see these just-released stocks with enormous potential. See New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report MetLife, Inc. (MET): Free Stock Analysis Report Prudential Financial, Inc. (PRU): Free Stock Analysis Report Sun Life Financial Inc. (SLF): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks