Critical Review: Prudential Financial (NYSE:PRU) and Goosehead Insurance (NASDAQ:GSHD)

Goosehead Insurance (NASDAQ:GSHD) and Prudential Financial (NYSE:PRU) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, profitability, dividends, valuation, analyst recommendations, risk and earnings.

Risk & Volatility

Goosehead Insurance has a beta of 1.54, indicating that its share price is 54% more volatile than the S&P 500. Comparatively, Prudential Financial has a beta of 0.97, indicating that its share price is 3% less volatile than the S&P 500.

Profitability

This table compares Goosehead Insurance and Prudential Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Goosehead Insurance	7.62%	-21.31%	7.79%
Prudential Financial	6.20%	16.32%	0.68%

Insider & Institutional Ownership

56.8% of Prudential Financial shares are owned by institutional investors. 48.4% of Goosehead Insurance shares are owned by company insiders. Comparatively, 0.3% of Prudential Financial shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Goosehead Insurance and Prudential Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Goosehead Insurance	1	5	7	0	2.46
Prudential Financial	0	10	1	0	2.09

Goosehead Insurance presently has a consensus target price of $84.00, indicating a potential upside of 88.98%. Prudential Financial has a consensus target price of $117.11, indicating a potential upside of 13.17%. Given Goosehead Insurance’s stronger consensus rating and higher possible upside, research analysts plainly believe Goosehead Insurance is more favorable than Prudential Financial.

Valuation & Earnings

This table compares Goosehead Insurance and Prudential Financial”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Goosehead Insurance	$365.30 million	4.48	$30.43 million	$1.04	42.74
Prudential Financial	$57.68 billion	0.62	$3.58 billion	$10.00	10.35

Prudential Financial has higher revenue and earnings than Goosehead Insurance. Prudential Financial is trading at a lower price-to-earnings ratio than Goosehead Insurance, indicating that it is currently the more affordable of the two stocks.

Summary

Goosehead Insurance beats Prudential Financial on 9 of the 14 factors compared between the two stocks.

About Goosehead Insurance

Goosehead Insurance, Inc. operates as a holding company for Goosehead Financial, LLC that engages in the provision of personal lines insurance agency services in the United States. The company offers homeowner’s, automotive, dwelling property, flood, wind, earthquake, excess liability or umbrella, motorcycle, recreational vehicle, general liability, property, and life insurance products and services. As of December 31, 2023, it operated 1,415 franchise locations. The company was founded in 2003 and is headquartered in Westlake, Texas.

About Prudential Financial

Prudential Financial, Inc., together with its subsidiaries, provides insurance, investment management, and other financial products and services in the United States and internationally. It operates through PGIM, Retirement Strategies, Group Insurance, Individual Life, and International Businesses segments. The PGIM segment offers investment management services and solutions related to public fixed income, public equity, real estate debt and equity, private credit and other alternatives, and multi-asset class strategies to institutional and retail clients, as well as its general account. The Retirement Strategies segment provides a range of retirement investment, and income products and services to retirement plan sponsors in the public, private, and not-for-profit sectors; develops and distributes individual variable and fixed annuity products. The Group Insurance segment offers various group life, and long-term and short-term group disability, as well as group corporate-, bank-, and trust-owned life insurance in the United States primarily for institutional clients for use in connection with employee and membership benefits plans; sells accidental death and dismemberment, and other supplemental health solutions; and plan administration services in connection with its insurance coverages. The Individual Life segment develops and distributes variable life, universal life, and term life insurance products. The International Businesses segment develops and distributes life insurance, retirement products, investment products, and certain accident and health products; and advisory services. The company provides its products and services to individual and institutional customers through its proprietary and third-party distribution networks. Prudential Financial, Inc. was founded in 1875 and is headquartered in Newark, New Jersey.