With a P/E of 9.2 might this be one of many FTSE 100’s finest discount shares?

2024 hasn’t been sort to the Prudential (LSE:PRU) share value. At 666.8p per share, the life insurance coverage big’s one of many FTSE 100‘s worst-performing shares within the yr so far, down 25%.

That sinking feeling at ‘The Pru’ hasn’t simply materialised nonetheless. The truth is, it’s halved in worth for the reason that begin of 2023 as worries over Asian economies — and notably key market China — have steadily constructed.

I can’t assist however suppose that the dangerous information is now greater than baked into Prudential’s low valuation although. It now trades on a price-to-earnings (P/E) ratio of 9.2 occasions, under the FTSE 100 common of 10.8 occasions.

The truth is, given how steady buying and selling stays on the rising markets firm, I imagine the market’s being overly bearish. Right here’s why I feel it may very well be one of many Footsie’s finest tactical buys proper now.

One other stable replace

In final week’s half-year assertion, Prudential stated that new enterprise revenue remained steady at $1.47bn within the interval. This was down 1% at precise trade charges, however given broader financial circumstances it nonetheless represented a fairly respectable efficiency.

Encouragingly, it added that “we’ve got seen a decide up in gross sales momentum in June [that’s continued] into the second half of the yr“.

This isn’t the primary reassuring replace it’s put out in current months. Certainly, adjusted working revenue on the agency elevated a wholesome 6% between January and June, to $1.5bn.

In different excellent news, Prudential stated its free surplus ratio was a strong 232% as of June. Down 10% share factors from the identical level in 2023, this remained effectively above the goal vary of 175-200%.

Accordingly, Prudential raised the interim dividend 9% to six.86 US cents per share.

Glorious worth

As I discussed earlier, Prudential shares commerce at a useful low cost to the broader FTSE 100. However this isn’t all. Because the desk under reveals, its ahead P/E ratio of 9.2 occasions can be decrease than all of these in its peer group (bar MetLife).

It may very well be argued that The Pru’s publicity to risky rising markets deserves such a reduction. There could also be some fact in that, however I’m not satisfied.

The truth is, I imagine it’s geographic footprint might give it higher funding potential than its trade rivals. Extra particularly, it has an incredible probability to harness the speedy inhabitants development and growing private incomes in its far-flung areas.

Certainly, demand for all times insurance coverage in Asia’s sharply accelerating, in line with analysis from Allianz. Regional premium development got here in at 14.9% in 2023, the agency stated, considerably larger than the 5.2% long-term common.

On this local weather, Prudential has stated it expects to ship “compounded annual development price for brand new enterprise revenue of 15% to twenty% and double-digit for money era“.

With the enterprise nonetheless increasing in Asia and investing closely on the digital aspect, I wouldn’t guess towards it.