Prudential (LSE: PRU) (NYSE: PUK.US) is a stock that I think offers excellent value for money at current price levels.
For instance, shares are currently trading on a forward price-to-earnings (P/E) ratio of 13.2, while the financials industry group and FTSE 100 trade on P/Es of 18.5 and 15 respectively.
So, why the big discount for Prudential? Is it a below-average company that deserves to trade on such a large discount to its sector and to the wider index?
Indeed, Prudential’s discount puzzles me. Here is a company that offers a wide range of products, many of which are leaders in their particular field.
Furthermore, a wide range of products means that Prudential benefits from a significant amount of diversification, with the company being split into four main divisions.
Prudential UK offers pension and other retirement products in the UK, while Jackson National Life Insurance Company offers similar services in the USA. Meanwhile, Prudential owns M&G Investments, one of the largest and most successful fund management companies in Europe, as well as providing health and protection insurance products in the fast-growing markets in Asia.
Clearly, Prudential offers a wide range of products to a diverse group of people. This means that risk is reduced through not being reliant upon one product or region and, if anything, I feel that Prudential should trade on a premium to its industry group and to the index as opposed to a discount.
In addition, Prudential’s share price chart appears to exude optimism. Shares are at an all-time high and show that market sentiment is strong.
Indeed, Prudential’s share price has doubled in the last two years alone and, although a repeat of such increases over the next two years may be unlikely, it shows that the market is receptive to the progress being made by the company. This bodes well for the future and indicates that the market is happy for Prudential to continue to make higher highs.
So, a relatively low P/E, a significant diversity of operations and a bullish chart all lead me to believe that Prudential is worth buying at current levels.
