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

Institutional & Insider Ownership

64.5% of Prudential Financial shares are held by institutional investors. Comparatively, 40.9% of Sun Life Financial shares are held by institutional investors. 0.7% of Prudential Financial shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and target prices for Prudential Financial and Sun Life Financial, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Prudential Financial 0 7 5 0 2.42
Sun Life Financial 0 9 1 0 2.10

Prudential Financial currently has a consensus price target of $114.70, suggesting a potential upside of 4.61%. Sun Life Financial has a consensus price target of $51.25, suggesting a potential upside of 28.77%. Given Sun Life Financial’s higher possible upside, analysts plainly believe Sun Life Financial is more favorable than Prudential Financial.

Profitability

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

Net Margins Return on Equity Return on Assets
Prudential Financial 7.15% 8.98% 0.56%
Sun Life Financial 12.48% 13.29% 1.03%

Earnings & Valuation

This table compares Prudential Financial and Sun Life Financial’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Prudential Financial $59.25 billion 0.79 $7.12 billion $8.92 12.29
Sun Life Financial $20.89 billion 1.17 $3.07 billion $3.17 12.56

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

Volatility and Risk

Prudential Financial has a beta of 1.51, suggesting that its share price is 51% more volatile than the S&P 500. Comparatively, Sun Life Financial has a beta of 0.88, suggesting that its share price is 12% less volatile than the S&P 500.

Dividends

Prudential Financial pays an annual dividend of $3.00 per share and has a dividend yield of 2.7%. Sun Life Financial pays an annual dividend of $1.39 per share and has a dividend yield of 3.5%. Prudential Financial pays out 33.6% of its earnings in the form of a dividend. Sun Life Financial pays out 43.8% 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. Sun Life Financial has increased its dividend for 8 consecutive years. Sun Life Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Prudential Financial beats Sun Life Financial on 9 of the 17 factors compared between the two stocks.

About Prudential Financial

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.

About Sun Life Financial

Sun Life Financial Inc. is the holding company of Sun Life Assurance Company of Canada. The Company is a financial services company providing a range of insurance, wealth and asset management solutions to individuals and corporate Clients. It operates through five segments. The Sun Life Financial Canada segment provides retail insurance and investment advice, products and services to people across Canada. The SLF U.S. segment has three business units: Group Benefits, International and In-force Management. Its Sun Life Financial Asset Management segment consists of MFS Investment Management and Sun Life Investment Management. The SLF Asia segment operates through subsidiaries in the Philippines, Hong Kong, Indonesia and Vietnam, as well as through joint ventures and associates with local partners in the Philippines, India, China and Malaysia. Its Corporate segment includes SLF U.K. and Corporate Support. Corporate Support operations consist of its Run-off reinsurance business.

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