Prudential plc’s Earnings Set To Soar By 83%!

Do you see insurance companies as safe investments, but a bit plodding and nothing to really get excited about?

prudentialIf you do, you should take a look at Prudential (LSE: PRU), whose earnings per share (EPS) are forecast to climb by 83% this year. And with a further 11% growth predicted by the end of 2015, that gives us a compounded growth over the two years of 103%. Some plodding!

Steady earnings growth

It’s true that the year to 2013 brought us a 38% drop in reported EPS, but that did come after four years of growth. In fact, if the latest consensus proves accurate, the result will be a rise in EPS from 47.5p in 2009 to 97p in 2014, with 107p to be reached in 2015.

On top of that, we’ll have seen dividends almost doubling from 2009’s 19.85p to a predicted 39.1p by 2015.

The trend in sentiment has been upbeat too, with the analysts getting increasingly bullish as the past year has progressed. Twelve months ago the great and good were telling us to expect EPS of 90p for 2014 — their rerating of that to 97p represents a 7.7% upgrade, against a general decline in sentiment towards FTSE 100 companies.

What about the cash?

CashThe same is true of dividend forecasts, with a year-old forecast of 33p for this year being steadily increased to the current 35.6p prediction. That would give us a yield of only a modest 2.6% based on today’s 1,344p share price — but it would be we covered by earnings 2.7 times, and would be 6% higher than 2013’s payout.

That’s a secure dividend, and with annual rises way ahead of inflation (there’s a further hike of 10% indicated for 2015), that long-term stability will be very attractive to a lot of investors.

In fact, with Prudential shares on a forward P/E of under 14 for this year, dropping to 12.5 for next, I reckon they’re looking like a very nice investment right now.

The Bulls are out

And the pundits think so too — we have 17 out of 20 of the City’s prognosticators urging us to buy the shares, with just two apparently thinking we should sell. That’s one of the best sets of recommendations on the market right now.

And if that’s not enough, the range of individual forecasts is reasonably tight too, for this year and for next. Got any boots that need filling?

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Alan does not own any shares in Prudential.