Prudential Financial (PRU) versus AEGON (AEG) Financial Analysis

Prudential Financial (NYSE: PRU) and AEGON (NYSE:AEG) are both large-cap financials companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, risk, earnings, valuation, analyst recommendations, institutional ownership and profitability.

Insider & Institutional Ownership

64.5% of Prudential Financial shares are owned by institutional investors. Comparatively, 10.1% of AEGON shares are owned by institutional investors. 0.7% of Prudential Financial shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Prudential Financial and AEGON’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Prudential Financial 7.71% 9.51% 0.57%
AEGON 5.64% 6.60% 0.39%

Analyst Ratings

This is a summary of recent recommendations for Prudential Financial and AEGON, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Prudential Financial 0 6 8 0 2.57
AEGON 0 2 0 0 2.00

Prudential Financial presently has a consensus price target of $119.08, suggesting a potential downside of 4.10%. AEGON has a consensus price target of $4.60, suggesting a potential downside of 32.25%. Given Prudential Financial’s stronger consensus rating and higher probable upside, equities analysts plainly believe Prudential Financial is more favorable than AEGON.

Earnings & Valuation

This table compares Prudential Financial and AEGON’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Prudential Financial $51.57 billion 1.02 $4.37 billion $9.92 12.52
AEGON $37.25 billion 0.37 $483.58 million $1.00 6.79

Prudential Financial has higher revenue and earnings than AEGON. AEGON is trading at a lower price-to-earnings ratio than Prudential Financial, indicating that it is currently the more affordable of the two stocks.

Dividends

Prudential Financial pays an annual dividend of $3.00 per share and has a dividend yield of 2.4%. AEGON pays an annual dividend of $0.25 per share and has a dividend yield of 3.7%. Prudential Financial pays out 30.2% of its earnings in the form of a dividend. AEGON pays out 25.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Prudential Financial has increased its dividend for 9 consecutive years and AEGON has increased its dividend for 2 consecutive years. AEGON is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk and Volatility

Prudential Financial has a beta of 1.55, indicating that its stock price is 55% more volatile than the S&P 500. Comparatively, AEGON has a beta of 1.42, indicating that its stock price is 42% more volatile than the S&P 500.

Summary

Prudential Financial beats AEGON on 15 of the 17 factors compared between the two stocks.

About Prudential Financial

Prudential Financial, Inc., is a financial services company. The Company, through its subsidiaries, offers a range of financial products and services, which includes life insurance, annuities, retirement-related services, mutual funds and investment management. The Company’s operations consists of four divisions, which together encompass seven segments. The U.S. Retirement Solutions and Investment Management division consists of Individual Annuities, Retirement and Asset Management segments. The U.S. Individual Life and Group Insurance division consists of Individual Life and Group Insurance segments. The International Insurance division consists of International Insurance segment. The Closed Block division consists of Closed Block segment. The Company has operations in the United States, Asia, Europe and Latin America.

About AEGON

Aegon N.V. (Aegon) is an international life insurance, pensions and asset management company. The Company’s segments include the Americas, which includes the United States, Mexico and Brazil; the Netherlands; the United Kingdom; Central & Eastern Europe; Spain & Portugal; Asia, and Aegon Asset Management. It offers protection against mortality, morbidity and longevity risks, including traditional and universal life. It offers products with mortality, morbidity, and longevity risks, including traditional and universal life; mortgages; annuity products, and banking products. It offers individual protection products, such as annuities, term insurance, income protection and international/offshore bonds. It has activities in the Czech Republic, Hungary, Poland, Romania, Slovakia and Turkey. It offers life insurance marketed to high-net-worth individuals in Hong Kong and Singapore. It also offers investment products covering third-party customers, insurance-linked solutions.

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