Is Prudential Financial, Inc. (PRU) overvalued?
On Equity Rank's model estimate, PRU trades 19% below its fair value. Prudential Financial, Inc. (PRU) last closed at $119.24; the multi-method model fair value is $147.09.
| Price | Model fair value | Price vs model |
|---|---|---|
| $119.24 | $147.09 | 19% below |
What the answer rests on
- 9 of 12 valuation methods put PRU's value above its price and 3 put it below, so the methods mostly agree.
- To justify today's price, PRU's free cash flow would need to grow about -9.2% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 6.7% a year.
- PRU trades at 10.8 times its last year's earnings, against a median of 13.1 for 75 profitable Insurance companies.
- Over the past year the price sat below the model fair value on 95% of trading days. The gap ranged from 27% below to 8% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind PRU's fair value · What prices assume · Other companies