Prudential Financial Trades Above 50-Day SMA: How to Play the Stock?

Prudential Financial, Inc. PRU has been trading above its 50-day simple moving average (SMA), signaling a short-term bullish trend.

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.

Price Performance of PRU

Shares of  Prudential Financial have lost 8% year to date, underperforming its industry, the Finance sector, and the Zacks S&P 500 Composite’s growth of 8%, 12.5% and 9.8%, respectively, in the same time frame.

The insurer has a market capitalization of $38.4 billion. The average volume of shares traded in the last three months was 1.6 million.

PRU Shares Are Affordable

Shares of Prudential Financial are trading at a discount compared to the industry. Its price-to-forward 12-month earnings of 7.58X is lower than the industry average of 9.15X.

Shares of other insurers like Horace Mann Educators Corporation HMN and Assurant, Inc. AIZ are trading at a multiple higher than the industry average, while shares of Everest Group, Ltd. EG are trading at a discount to the industry average.

Projections for PRU

The Zacks Consensus Estimate for Prudential Financial’s 2025 earnings per share indicates a year-over-year increase of 8.1%. The consensus estimate for revenues is pegged at $55.73 billion. The consensus estimate for 2026 earnings per share and revenues indicates a rise of 8.5% and 4.2%, respectively, from the corresponding 2025 estimates. The expected long term earnings is pegged at 8.2%.

Optimistic Analyst Sentiment on PRU

The Zacks Consensus Estimate for 2025 earnings has moved up 1.4% in the past 30 days, while the same for 2026 has moved up 0.5% in the same time frame.

Average Target Price for PRU Suggests Upside

Based on short-term price targets offered by 15 analysts, the Zacks average price target is $116.13 per share. The average suggests a potential 5.7% upside from the last closing price.

Key Points to Note for PRU

Prudential Financial’s key growth drivers include solid asset-based operations, margin gains in Group Insurance, and expanding international businesses. Its strong asset management platform and rising share in the pension risk transfer market add further momentum. Strategic initiatives have reinforced core strengths, enabling effective capital deployment to support long-term growth.

Prudential Financial’s global operations create superior organic growth avenues compared to peers, with Japan serving as a cornerstone through its strong demand for protection and retirement solutions, historically generating ROE around 20%. The Brazilian franchise, having achieved critical scale, is expected to meaningfully contribute to future earnings, while the expansion into Malaysia opens a promising market defined by low insurance penetration, supportive regulation, and considerable long-term growth capacity.

With $12 billion in second-quarter sales from its Institutional and Individual Retirement Strategies, Prudential Financial continues to demonstrate solid momentum. The company ranks among the top five U.S. individual life insurers, supported by recurring premium growth, wider distribution, greater scale, and an expanded product mix. The U.S. segment is further advancing this leadership by improving customer experience and broadening market reach through innovative financial solutions.

Prudential Financial is advancing sustainable, profitable growth by refining its strategy, strengthening execution, and building a high-performance culture. Recent progress includes combining PGIM’s multi-manager model into a unified $1 trillion public and private credit platform, aimed at improving efficiency, broadening cross-selling prospects, and driving higher revenue.

Wealth Distribution of PRU

Prudential Financial remains focused on enhancing shareholder value by delivering consistent capital returns. PRU has raised its dividend five times in the past five years, reflecting 4.27% growth in payouts during that period. In December 2024, the board of directors approved a $1 billion share buyback program, of which $500 million still remains under authorization.

Financial Headwinds for PRU

Despite solid progress, Prudential Financial faces headwinds from prolonged low interest rates, weakness in its group disability business and rising expenses that continue to pressure margin expansion.  

Prudential Financial’s involvement in products such as annuities and universal life, which promise minimum returns, places pressure on its capital base. Persistently low interest rates have amplified this strain by raising liability values and requiring additional reserve build-up, which has weighed on results.

As of June 30, 2025, Prudential Financial’s total debt reached $20.9 billion, a 4% increase from 2024-end, pushing its debt-to-equity ratio to 39.32% compared with the industry average of 34.26%. Rising debt balances have led to higher interest expenses. Return on invested capital was 1.02%, below the industry’s benchmark of 2.02%, underscoring inefficiencies that could pressure future returns.

Conclusion

Prudential Financial’s diversified operations, international scale, and strong retirement and asset management businesses provide a solid foundation for long-term growth. However, challenges such as exposure to interest-rate sensitive products, rising leverage, higher expenses, and below-average returns highlight execution risks.

Given its unfavorable ROIC and price underperformance, it is better to wait for some more time before taking a call on this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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