LONDON -- I'm always searching for shares that can help ordinary investors like you make money from the stock market.
So right now I am trawling through the FTSE 100 and giving my verdict on every member of the blue-chip index. Simply put, I'm hoping to pinpoint the very best buying opportunities in today's uncertain market.
Today, I am looking at Prudential plc (LON:PRU) to determine whether you should consider buying the shares at 1,097p.
I am assessing each company on several ratios:
Price-to-earnings (P/E): Does the share look good value when compared against its competitors?
Price Earnings Growth (PEG): Does the share look good value factoring in predicted growth?
Yield: Does the share provide a solid income for investors?
Dividend cover: Is the dividend sustainable?
|Stock||Price||3-yr EPS growth||Projected P/E||PEG||Yield||3-yr dividend growth||Dividend cover|
The consensus analyst estimate for this year's earnings per share is 89p (11% growth) and dividend per share is 31p (4% growth).
Trading on a projected P/E of 12.3, Prudential plc (LON:PRU) is slightly cheaper than its peers in the life insurance sector, which are currently trading on an average P/E of around 13.2.
Prudential's P/E and double-digit growth rate give a PEG ratio of around 1, which implies the share is fairly priced for the near-term earnings growth the firm is expected to produce.
Offering a 2.8% yield, Prudential plc (LON:PRU)'s dividend yield is below the life insurance sector average of 4%. In addition, Prudential has a three-year compounded dividend growth rate of only 22%, implying the yield will continue to underperform that of its peers.
However, the dividend is more than three times covered by earnings, giving Prudential plenty of room for further payout growth.
So, is now the time to buy Prudential? Shares in life insurance provider Prudential have been going from strength to strength over the last year, rising nearly 50% compared to the FTSE 100 as a whole, which only gained 13% over the same period.