Share of the Week from The Share Centre

 

“Overseas operations continue to perform very well for Prudential and are likely to deliver good growth moving forward. Prudential has been continuing to develop its Asian arm, building a substantial presence in the area. It is now the leading European insurance player in the region, which accounts for half of the group’s business. 

 

“Last year the weaker markets, led by the financial crisis in Europe, battered those companies that specifically focus on financial matters and Prudential was no exception. This was highlighted in early November when the company’s share price plummeted on the announcement of its increase in Q3 profits. However, the company believes it has adequate capital surplus to withstand further significant deterioration in the European market, which should provide some reassurance to investors. 

 

“We recommend Prudential as a ‘buy’ for those investors looking to add an insurer to their portfolio and are comfortable with the majority of exposure across three major geographical regions, the UK, the U.S and Asia. The estimated forward P/E of 10.9 suggests that there is some value in the company. Brokers are estimating weaker earnings in the financial year ending 2012, which is probably factored into the current share price. Prudential continues to deliver profitable growth and has a solid yield, which looks adequately covered.”