Critical Analysis: Prudential Financial (NYSE:PRU) & MBIA (NYSE:MBI)

Prudential Financial (NYSE:PRU) and MBIA (NYSE:MBI) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, earnings, analyst recommendations, valuation, profitability, dividends and institutional ownership.

Earnings and Valuation

This table compares Prudential Financial and MBIA”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Prudential Financial	$68.05 billion	0.54	$2.73 billion	$4.51	23.06
MBIA	$42.00 million	8.71	-$444.00 million	($4.65)	-1.56

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

Risk & Volatility

Prudential Financial has a beta of 1.04, suggesting that its stock price is 4% more volatile than the S&P 500. Comparatively, MBIA has a beta of 1.83, suggesting that its stock price is 83% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings for Prudential Financial and MBIA, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Prudential Financial	1	11	1	0	2.00
MBIA	1	0	1	0	2.00

Prudential Financial currently has a consensus price target of $122.08, suggesting a potential upside of 17.38%. MBIA has a consensus price target of $8.00, suggesting a potential upside of 10.42%. Given Prudential Financial’s higher possible upside, equities research analysts clearly believe Prudential Financial is more favorable than MBIA.

Institutional and Insider Ownership

56.8% of Prudential Financial shares are held by institutional investors. Comparatively, 61.0% of MBIA shares are held by institutional investors. 0.3% of Prudential Financial shares are held by company insiders. Comparatively, 12.6% of MBIA shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Prudential Financial	2.75%	15.80%	0.64%
MBIA	-218.45%	N/A	-1.75%

Summary

Prudential Financial beats MBIA on 8 of the 12 factors compared between the two stocks.

About Prudential Financial

Prudential Financial, Inc., together with its subsidiaries, provides insurance, investment management, and other financial products and services in the United States and internationally. It operates through PGIM, Retirement Strategies, Group Insurance, Individual Life, and International Businesses segments. The PGIM segment offers investment management services and solutions related to public fixed income, public equity, real estate debt and equity, private credit and other alternatives, and multi-asset class strategies to institutional and retail clients, as well as its general account. The Retirement Strategies segment provides a range of retirement investment, and income products and services to retirement plan sponsors in the public, private, and not-for-profit sectors; develops and distributes individual variable and fixed annuity products. The Group Insurance segment offers various group life, and long-term and short-term group disability, as well as group corporate-, bank-, and trust-owned life insurance in the United States primarily for institutional clients for use in connection with employee and membership benefits plans; sells accidental death and dismemberment, and other supplemental health solutions; and plan administration services in connection with its insurance coverages. The Individual Life segment develops and distributes variable life, universal life, and term life insurance products. The International Businesses segment develops and distributes life insurance, retirement products, investment products, and certain accident and health products; and advisory services. The company provides its products and services to individual and institutional customers through its proprietary and third-party distribution networks. Prudential Financial, Inc. was founded in 1875 and is headquartered in Newark, New Jersey.

About MBIA

MBIA Inc. provides financial guarantee insurance services to public finance markets in the United States. It operates United States (U.S.) Public Finance Insurance, and International and Structured Finance Insurance segments. The company issues financial guarantees for municipal bonds, including tax-exempt and taxable indebtedness of the U.S. political subdivisions, as well as utility districts, airports, health care institutions, higher educational facilities, housing authorities, and other similar agencies and obligations issued by private entities. It also insures the non-U.S. public finance and global structured finance, including asset-backed obligations; and sovereign-related and sub-sovereign bonds, and privately issued bonds used for the financing for utilities, toll roads, bridges, public transportation facilities, and other types of infrastructure projects, as well as offers third-party reinsurance services. MBIA Inc. was founded in 1973 and is headquartered in Purchase, New York.