Analyzing Manulife Financial Corp (MFC) and Prudential Financial (PRU)

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

Risk & Volatility

Manulife Financial Corp has a beta of 1.32, indicating that its share price is 32% more volatile than the S&P 500. Comparatively, Prudential Financial has a beta of 1.56, indicating that its share price is 56% more volatile than the S&P 500.

Dividends

Manulife Financial Corp pays an annual dividend of $0.66 per share and has a dividend yield of 3.1%. Prudential Financial pays an annual dividend of $3.00 per share and has a dividend yield of 2.7%. Manulife Financial Corp pays out 47.1% of its earnings in the form of a dividend. Prudential Financial pays out 30.2% 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. Manulife Financial Corp has raised its dividend for 8 consecutive years and Prudential Financial has raised its dividend for 3 consecutive years. Manulife Financial Corp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares Manulife Financial Corp and Prudential Financial’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Manulife Financial Corp $40.27 billion 1.04 $2.26 billion $1.40 15.07
Prudential Financial $51.57 billion 0.91 $4.37 billion $9.94 11.09

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

Insider & Institutional Ownership

45.9% of Manulife Financial Corp shares are held by institutional investors. Comparatively, 64.5% of Prudential Financial shares are held by institutional investors. 0.7% of Prudential Financial shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Manulife Financial Corp and Prudential Financial, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Manulife Financial Corp 0 1 0 0 2.00
Prudential Financial 0 6 8 0 2.57

Manulife Financial Corp currently has a consensus target price of $27.00, indicating a potential upside of 27.96%. Prudential Financial has a consensus target price of $116.36, indicating a potential upside of 5.55%. Given Manulife Financial Corp’s higher probable upside, equities research analysts clearly believe Manulife Financial Corp is more favorable than Prudential Financial.

Profitability

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

Net Margins Return on Equity Return on Assets
Manulife Financial Corp N/A 11.55% 0.64%
Prudential Financial 7.71% 9.51% 0.57%

Summary

Prudential Financial beats Manulife Financial Corp on 10 of the 17 factors compared between the two stocks.

Manulife Financial Corp Company Profile

Manulife Financial Corporation (MFC) is a holding company of The Manufacturers Life Insurance Company (MLI), which is a life insurance company, and John Hancock Reassurance Company Ltd. (JHRECO), which is a reinsurance company. The Company operates as a financial services company with principal operations in Asia, Canada and the United States. The Company’s segments include Asia Division, Canadian Division, U.S. Division, and the Corporate and Other. The Company operates as Manulife in Canada and Asia and primarily as John Hancock in the United States. The product and service offerings under its Asia, Canadian and U.S. Divisions include Protection, Wealth and Asset Management, and Other Wealth. The Corporate and Other segment includes external asset management business, Property and Casualty (P&C) Reinsurance Business, and run-off reinsurance operations, including variable annuities, and accident and health.

Prudential Financial Company Profile

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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