50% Of 2010 Earnings From Overseas Predicted For Prudential Financial (PRU), International Expansion Contributes To Strong Buy-Rating By Industry Expert
finance.yahoo.com
When I look at Prudential Financial (PRU), number one, they are sitting on an extremely large excess capital position. A lot of that had to do with the fact that they sold their Wachovia joint venture, which resulted in something like a $1.3 billion gain. So they have a lot of excess capital to deploy, which opens up a lot of opportunities, in my view. In terms of what they'll do with that, time will tell. But they're certainly best positioned to deploy a considerable amount of capital and liquidity back into to the capital markets, pursue meaningful M&A opportunities and potentially buy back shares, all of which, in my eyes, will translate into PRU generating a higher return equity going forward versus their peers. But aside from PRU's financial flexibility, I think the company possesses the best return on equity prospects in my coverage universe, based on their collection of high-growth and less-capital-intensive businesses, strong brand name and superior distribution capabilities. In 2009 and into the first quarter of this year, Prudential reported record results in many products areas. This comes at a time when most in the industry weren't reporting great results at all. So that's a big reason why I like PRU. Also their international segment, in my opinion, is the crown jewel of the company that generates a lot higher ROE in its business, mainly located in Japan and Korea. PRU's ROE in its international segment has been somewhere around 30%, while domestically ROEs last year for the industry averaged in the high single digits. |
