Analyzing Prudential Financial (PRU) and AmTrust Financial Services (AFSI)

Prudential Financial (NYSE: PRU) and AmTrust Financial Services (NASDAQ:AFSI) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, institutional ownership, risk, dividends, analyst recommendations, earnings and valuation.

Earnings & Valuation

How to Become a New Pot Stock Millionaire

This table compares Prudential Financial and AmTrust Financial Services’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Prudential Financial $53.65 billion 0.80 $7.86 billion $10.58 9.67
AmTrust Financial Services $5.96 billion 0.41 -$348.88 million $2.64 4.67

Prudential Financial has higher revenue and earnings than AmTrust Financial Services. AmTrust Financial Services 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 $3.60 per share and has a dividend yield of 3.5%. AmTrust Financial Services pays an annual dividend of $0.68 per share and has a dividend yield of 5.5%. Prudential Financial pays out 34.0% of its earnings in the form of a dividend. AmTrust Financial Services pays out 25.8% 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 raised its dividend for 9 consecutive years. AmTrust Financial Services is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Prudential Financial and AmTrust Financial Services, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Prudential Financial 0 5 8 0 2.62
AmTrust Financial Services 0 6 0 0 2.00

Prudential Financial currently has a consensus target price of $118.09, indicating a potential upside of 15.40%. AmTrust Financial Services has a consensus target price of $14.17, indicating a potential upside of 14.80%. Given Prudential Financial’s stronger consensus rating and higher possible upside, equities analysts plainly believe Prudential Financial is more favorable than AmTrust Financial Services.

Profitability

This table compares Prudential Financial and AmTrust Financial Services’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Prudential Financial 13.41% 9.29% 0.57%
AmTrust Financial Services -5.67% -3.33% -0.36%

Insider & Institutional Ownership

66.8% of Prudential Financial shares are owned by institutional investors. Comparatively, 29.3% of AmTrust Financial Services shares are owned by institutional investors. 0.7% of Prudential Financial shares are owned by insiders. Comparatively, 50.8% of AmTrust Financial Services shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Volatility and Risk

Prudential Financial has a beta of 1.52, indicating that its share price is 52% more volatile than the S&P 500. Comparatively, AmTrust Financial Services has a beta of 1.28, indicating that its share price is 28% more volatile than the S&P 500.

Summary

Prudential Financial beats AmTrust Financial Services on 14 of the 17 factors compared between the two stocks.

About Prudential Financial

Prudential Financial, Inc., through its subsidiaries, provides insurance, investment management, and other financial products and services in the United States and internationally. It operates through U.S. Individual Solutions, U.S. Workplace Solutions, Investment Management, and International Insurance divisions. The U.S. Individual Solutions division offers individual variable and fixed annuity products to the mass affluent and affluent markets. It also provides universal, term, variable, and other life insurance products to the mass middle, mass affluent, and affluent markets. The U.S. Workplace Solutions division provides recordkeeping, plan administration, actuarial advisory, tailored participant education and communication, trustee, institutional and retail investment, and brokerage services, as well as institutional investment products to the payout annuity and stable value markets. It also provides group life; long-term and short-term group disability; and group corporate-, bank-, and trust-owned life insurance to institutional clients for employee plans and affinity groups, as well as accidental death, dismemberment, other ancillary coverage, and plan administrative services. The Investment Management division offers asset management services, such as institutional portfolio and retail funds management, private lending and asset securitization, and other structured products for public and private fixed income, public equity, and real estate, as well as commercial mortgage origination and servicing, mutual funds, and other retail services. The International Insurance division provides individual and group life insurance, retirement, and related products, as well as reinsurance products. The company offers its products and services to individual and institutional customers through its proprietary and third-party distribution networks. Prudential Financial, Inc. was founded in 1875 and is headquartered in Newark, New Jersey.

About AmTrust Financial Services

AmTrust Financial Services, Inc. provides property and casualty insurance in the United States and internationally. The company operates in three segments: Small Commercial Business, Specialty Risk and Extended Warranty, and Specialty Program. The Small Commercial Business segment offers workers' compensation insurance products; and commercial package, and other property and casualty insurance products, such as commercial property, general liability, inland marine, employment practices liability, commercial automobile, and umbrella coverage to small businesses. The Specialty Risk and Extended Warranty segment provides custom designed coverages, such as accidental damage plans, mechanical breakdown protection, and payment protection plans in connection with the sale of consumer and commercial goods; and coverage for niche property, casualty, and specialty liability risks comprising general liability, employers' liability, and professional and medical liability. The Specialty Program segment offers workers' compensation, general liability, commercial auto liability, property coverage, excess and surplus lines programs, and other specialty commercial property and casualty insurance products to small and middle market companies. The company also provides reinsurance services primarily for personal and commercial automotive business. It distributes its policies third-party brokers, agents, retailers, or administrators. AmTrust Financial Services, Inc. was founded in 1998 and is based in New York, New York.

Receive News & Ratings for Prudential Financial Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Prudential Financial and related companies with MarketBeat.com's FREE daily email newsletter.

Leave a Reply