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Why Prudential Stock Gained 15% in April

By Demitri Kalogeropoulos – Updated May 9, 2019 at 8:59AM

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Investors bet on improving operating results from the financial services specialist.

What happened

Financial services giant Prudential (PRU 1.09%) outpaced the market last month as the stock rose 15% versus a 4% jump in the S&P 500, according to data provided by S&P Global Market Intelligence.

The rally added on to strong returns for shareholders, with the stock up over 20% so far in 2019 compared with a 15% increase in the broader market.

A man signs a document.

Image source: Getty Images.

So what

April's rally came as investors bet that the company's first-quarter report, slated for May 1, would show strong operating results. Prudential didn't disappoint in that regard. Key operating metrics including book value and return on equity rose despite a modest decrease in adjusted operating income. The company continued its strategy of returning plenty of excess capital to shareholders, with $915 million directed toward investors through stock buybacks and dividend payments.

Now what

Prudential plans to spend about $1.5 billion over the next three quarters on repurchasing its stock, and its 11% dividend hike also implies increased direct returns on the way for investors. Over the longer term, its success will depend on management's ability to strengthen its three main revenue streams -- U.S. workplace financial products, global asset management, and international life insurance -- while always selling its offerings at an appropriate risk-based price.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Prudential Financial, Inc. Stock Quote
Prudential Financial, Inc.
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