Trade-Ideas: Prudential Financial (PRU) Is Today's

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Prudential Financial ( PRU) as a "storm the castle" (crossing above the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Prudential Financial as such a stock due to the following factors:

  • PRU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $196.9 million.
  • PRU has traded 664,829 shares today.
  • PRU is trading at 3.91 times the normal volume for the stock at this time of day.
  • PRU crossed above its 200-day simple moving average.

'Storm the Castle' stocks are worth watching because trading stocks that begin to experience a breakout can lead to potentially massive profits. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock is then free to find new buyers and momentum traders who can ultimately push the stock significantly higher. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize on. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on PRU:

Prudential Financial, Inc. provides insurance, investment management, and other financial products and services to individual and institutional customers in the United States and internationally. The stock currently has a dividend yield of 2.8%. PRU has a PE ratio of 26.1. Currently there are 11 analysts that rate Prudential Financial a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Prudential Financial has been 2.6 million shares per day over the past 30 days. Prudential Financial has a market cap of $37.9 billion and is part of the financial sector and insurance industry. The stock has a beta of 1.86 and a short float of 1% with 1.87 days to cover. Shares are down 7.8% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Prudential Financial as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and relatively poor performance when compared with the S&P 500 during the past year.

Highlights from the ratings report include:
  • PRU's very impressive revenue growth greatly exceeded the industry average of 2.7%. Since the same quarter one year prior, revenues leaped by 58.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 169.20% to $7,974.00 million when compared to the same quarter last year. In addition, PRUDENTIAL FINANCIAL INC has also vastly surpassed the industry average cash flow growth rate of 2.93%.
  • PRUDENTIAL FINANCIAL INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, PRUDENTIAL FINANCIAL INC turned its bottom line around by earning $3.08 versus -$1.61 in the prior year. This year, the market expects an improvement in earnings ($9.69 versus $3.08).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Insurance industry. The net income has significantly decreased by 217.2% when compared to the same quarter one year ago, falling from -$460.00 million to -$1,459.00 million.
  • The gross profit margin for PRUDENTIAL FINANCIAL INC is currently extremely low, coming in at 11.24%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -9.27% is significantly below that of the industry average.

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