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

Analyst Ratings

This is a summary of current ratings and price targets for Aflac and Prudential Financial, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Aflac 4 5 2 0 1.82
Prudential Financial 0 7 5 0 2.42

Aflac currently has a consensus target price of $76.60, suggesting a potential downside of 6.85%. Prudential Financial has a consensus target price of $113.40, suggesting a potential upside of 5.16%. Given Prudential Financial’s stronger consensus rating and higher probable upside, analysts clearly believe Prudential Financial is more favorable than Aflac.

Profitability

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

Net Margins Return on Equity Return on Assets
Aflac 11.98% 13.09% 2.05%
Prudential Financial 7.15% 8.98% 0.56%

Dividends

Aflac pays an annual dividend of $1.72 per share and has a dividend yield of 2.1%. Prudential Financial pays an annual dividend of $3.00 per share and has a dividend yield of 2.8%. Aflac pays out 25.9% of its earnings in the form of a dividend. Prudential Financial pays out 33.6% 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. Aflac has increased its dividend for 34 consecutive years and Prudential Financial has increased its dividend for 8 consecutive years.

Risk & Volatility

Aflac has a beta of 0.96, indicating that its share price is 4% less volatile than the S&P 500. Comparatively, Prudential Financial has a beta of 1.51, indicating that its share price is 51% more volatile than the S&P 500.

Earnings and Valuation

This table compares Aflac and Prudential Financial’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Aflac $22.65 billion 1.43 $4.75 billion $6.63 12.40
Prudential Financial $59.25 billion 0.78 $7.12 billion $8.92 12.09

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

Insider and Institutional Ownership

65.6% of Aflac shares are held by institutional investors. Comparatively, 64.5% of Prudential Financial shares are held by institutional investors. 3.0% of Aflac shares are held by insiders. Comparatively, 0.7% of Prudential Financial shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Aflac beats Prudential Financial on 9 of the 17 factors compared between the two stocks.

About Aflac

Aflac Incorporated is a business holding company. The Company is involved in supplemental health and life insurance, which is marketed and administered through its subsidiary, American Family Life Assurance Company of Columbus (Aflac). The Company’s insurance business consists of two segments: Aflac Japan and Aflac U.S. The Company designs the United States insurance products to provide supplemental coverage for people having medical or primary insurance coverage. Aflac U.S. offers accident coverage on both an individual and group basis. The Company offers cancer plans, critical illness plans, and critical care and recovery plans. The Company designs the United States insurance products to provide supplemental coverage for people having medical or primary insurance coverage. Aflac U.S. offers accident coverage on both an individual and group basis. The Company offers cancer plans, critical illness plans, and critical care and recovery plans.

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.

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