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5 Buy-Rated Insurance Stocks for Long-Term Investors

Stocks in this article: BAC MET BRK.B PRU TRV ACE

2. Prudential Financial

Shares of Prudential Financial (PRU - Get Report) closed at $61.88 Thursday, returning 23% year-to-date, after pulling back 12% during 2011. The company paid an annual dividend of $1.45 a share in November, increasing from $1.15 in November 2010. Based on the most recent annual dividend, the shares have a dividend yield of 2.34%.

The shares trade for just 0.8 times tangible book value, and for nine times the consensus 2012 EPS estimate of $7.00. The consensus 2013 EPS estimate is $8.19.

The company earned $3.5 billion, or $6.41 a share, during 2011, increasing from $2.7 billion, or $6.17 a share, during 2010. Total revenue increased 29% year-over-year, to $39.4 billion in 2011, while adjusted operating income increased 7% to $4.3 billion.

Evercore Partners analyst Mark Finkelstein on Feb. 23 raised his 2012 EPS estimate for Prudential by a dime to $7.07 and his 2013 estimate, also by ten cents, to $8.27, to reflect "the impact of higher equity markets, with modest model refinements throughout."

The analyst rates Prudential "Equal-Weight," with a price target of $70, saying "PRU has solid growth prospects, both domestically and abroad, and a strong capital position. And although some businesses are showing pressure (eg Group, Full Service Retirement), we generally like the businesses PRU is in."

Finkelstein added that with returns on equity "expanding to close to 13% by 2013, with good growth and attractive businesses, we see the shares as attractive in what we believe is still an undervalued sector," and "continue to see capital deployment a key theme and positive for PRU between buybacks and strategic M&A."

Prudential repurchased 19.8 million shares of its Common Stock during 2011 for a total of $1.0 billion, for an average price of $50.53 per share.

Interested in more on Prudential Financial? See TheStreet Ratings' report card for this stock.

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