Key Morningstar Metrics for Prudential
- Fair Value Estimate: GBX 1,210
- Morningstar Rating: ★★★★
- Morningstar Economic Moat Rating: None
- Morningstar Uncertainty Rating: High
What We Thought of Prudential’s Earnings
In Prudential’s PRU interim earnings announcement for first-half 2025, the business looks on track to meet or exceed its 10% growth guidance for full-year 2025. The business also looks broadly on track to meet its targets for the current strategic plan that runs to 2027.
Why it matters: Prudential’s double-digit growth in new business profit has been aided by a 12% rise in annual premiums. That has been helped by agents using Prudential’s digital leads platform PRULeads, which is new to Prudential customers, as well as good Citic bancassurance sales.
- For the first half of this year, Prudential reported a 12.4% rise in new business profit to $1.26 billion. We think this leaves Prudential in the upper end of its 15% to 20% 2022-27 compound annual growth for its new business profit target under tangible embedded value.
- For the first half, operating free surplus generation from in-force insurance and asset management is up 14% to $1.56 billion. Though we think this does leave the business a little behind its 2027 target of operating free surplus from in-force insurance and asset management of $4.4 billion.
The bottom line: We maintain our GBX 1,210 per-share fair value estimate and no moat rating. Shares currently screen as undervalued. Having started to explore the IPO offering of ICICI Prudential Asset Management in February this year, Prudential has filed the draft offer documents.
- The earnings release on Aug. 27 comes with the announcement of a $ 0.0771 per-share interim dividend. And upgraded guidance to grow the dividend per share by 10% per year from 2025 to 2027. Shares will trade excluding this interim on Sept. 4, and it is payable on Oct. 16.
- Additional capital returns have been announced with a $500 million share buyback in 2026 and $600 million in 2027. This is on top of the existing $2 billion share buyback plan that has been accelerated to occur between Jan. 1 and the end of this year.
