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Prudential Financial, Inc. (PRU) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Prudential Financial, Inc. (PRU)

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Intrinsic Value (DCF)

Current$116.43
→
Intrinsic$129.26
+11%
$85.75$129.26$211.98
Market implies 6% growth for 5 years
PRU appears fairly valued — current price aligns with our DCF estimate.
At $116, the market prices in only 6% growth — below historical 8%, suggesting low expectations.
Range: Bear $86 → Bull $212. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →4%6%8%10%
8%$155$170$186$203
10%$108$118$129$141
12%$82$90$98$107
14%$65$72$78$85

Bull Case

  • Bull case ($212) offers 82% upside at 10% growth, 9% discount
  • 10% margin of safety vs. base case estimate
  • Market-implied growth (6%) ≤ historical CAGR (8%)

Bear Case

  • Bear case ($86) implies 26% downside at 6% growth, 12% discount
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5-Year Net Income Projection

Year 1$2.95B
Year 2$3.18B
Year 3$3.44B
Year 4$3.71B
Year 5$4.01B
Terminal$58.96B

📐 Model Inputs

Growth Rate8.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Net Income$2.73BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. Uses Net Income (FCF not meaningful for insurers). See FAQ below for full methodology.

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Frequently Asked Questions

Is PRU stock undervalued or overvalued?
🟡 FAIRLY VALUED

PRU trades at $116.43, within 10% of our $129.26 intrinsic value estimate. At 10.0% WACC and 8.0% FCF growth, the market is pricing in assumptions roughly aligned with the 5-year historical CAGR. The valuation range spans $91.28 (bear) to $180.05 (bull).

What is PRU's intrinsic value?

Using a 5-year DCF model: Base FCF of $2.73B, projected at 8.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $3.07B net debt and dividing by 0.36B shares: Bear $91.28 | Base $129.26 | Bull $180.05. Current price $116.43 implies +10% to base case.

How is PRU's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 8.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($49.52B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 18.2x.