Prudential’s Share Price (LON: PRU) Shed 16% YTD, Near 12-Year Low As Profits Climb

Investors hunting for undervalued stocks in the FTSE 100 might find Prudential PLC shares (LON: PRU) an interesting case, trading down at 716.4. This marks their weakest performance since 2012, highlighting a significant potential discount for bargain seekers.

Over the past year, Prudential has faced a 32% drop in its share value, stirring worries as well as hopes for a turnaround among keen market watchers. However, it's not all bleak for the insurance giant. In 2023, there was a noticeable 45% jump in business profits, reaching an impressive $3.125 billion, largely thanks to a strategic pivot towards the burgeoning markets of Asia.

This pivot seems to pay off, as the adjusted operating profit reflects an 8% climb to $2.893 billion in the previous year. This upward trend correlates with CEO Anil Wadhwani’s announcement of a lucrative return of $2 billion to the shareholders through a share buyback strategy expected to unfold by mid-2026.

Moreover, the company board resonated this sentiment by hiking the full-year dividend by 9% to 20.47 US cents per share. Though the current dividend yield stands at 2.29%, which is under the FTSE 100 average of 3.7%, it doesn’t necessarily dim the firm's investment appeal.

With a price-to-earnings (P/E) ratio of 10.76, Prudential’s stock is an enticing offer compared to the FTSE 100’s average P/E of 12.7. Being operational not only in the massive markets of China, Thailand, and India, but also with planning underway to expand into Africa, Prudential has positioned itself as a global contender poised potentially to recover and grow.

Still categorised as a recovery opportunity, Prudential appears as yet to fully cash in on the promise and potential it exhibits. However, Prudential’s true challenge lies in convincing the market that it can redefine itself while securing sustainable growth.

Financial analysts and shareholders alike will be keeping a close watch on Prudential’s next moves. With aspects such as market penetration, profit margins, and investor returns under scrutiny, only time will tell if Prudential can reclaim its former glory and validate the trust of its investors. For now, the once-lucrative stock remains on the watchlists, its potential a beacon for those willing to bet on its recovery.