Sales rattle along at breakneck speed
Prudentials ability to keep new business flowing through the doors despite economic and regulatory difficulties is nothing short of remarkable. The life insurance giant saw operating profit surge 17% during January-June to 1.5bn, driven by a gargantuan 24% uptick in new business levels to just over 1bn.
Shrugging off the effect of this years Budget in Britain which caused annuity sales to collapse, Prudential saw operating profit from the UK10% higher to 374m owing to strength across the rest of its product portfolio.
And last month the company announced that plans to launch its own platform as part of a wider 100m investment programme, bringing the firm in line with rising digitalisation in the industry and which should thrust sales still higher.
Meanwhile, Prudentials first-half performance across the Atlantic was even better than that of its home markets, with profits from the US rising 18% to 686m. And in Asia, even though operating profit edged just 2% higher during the period, to 483m, Prudential has made no secret of the fact that it sees emerging markets as the linchpin to exceptional earnings growth looking ahead.
The acquisition of Thanachart Life in Thailand last year has helped thrust new sales in this region higher, and the business also bought Ghanas Express Life life insurance specialists in March to gain exposure to this lucrative market.
And with the firms underlying free cash surplus galloping 13% higher to 1.2bn during January-June, I believe that Prudential is a dead cert to engage in further M&A activity in developing regions to kick earnings still higher.
Growth story expected to roll on
Against this backdrop, City analysts expect Prudential to maintain its terrific record of reliable earnings growth in coming years, with growth of 6% to 96.3p per share in 2014 predicted to rise to 12% during the following 12-month period, to 107.8p.
These forecasts leave the company dealing on a P/E multiple of 14.8 prospective earnings for this year, just within the widely-regarded standard of 15 or below which indicates attractive value for money, and which falls to 13.2 for 2015.
And Prudentials improving value for money is highlighted by a price to earnings to growth (PEG) readout for next year, which drops from 2.5 for 2014 to just 1.1 for 2015. Any figure below or around 1 is considered exceptional bang for ones buck.
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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.