Prudential Financial (NYSE:PRU) and Lemonade (NYSE:LMND) Critical Review

Prudential Financial (NYSE:PRU) and Lemonade (NYSE:LMND) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, institutional ownership, risk, valuation, analyst recommendations, dividends and earnings.

Institutional & Insider Ownership

56.8% of Prudential Financial shares are owned by institutional investors. Comparatively, 80.3% of Lemonade shares are owned by institutional investors. 0.1% of Prudential Financial shares are owned by insiders. Comparatively, 12.5% of Lemonade shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Prudential Financial	6.20%	16.32%	0.68%
Lemonade	-22.43%	-31.19%	-8.67%

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Prudential Financial	$57.68 billion	0.58	$3.58 billion	$10.00	9.64
Lemonade	$737.90 million	6.85	-$165.50 million	($2.26)	-29.26

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

Volatility and Risk

Prudential Financial has a beta of 0.95, indicating that its share price is 5% less volatile than the S&P 500. Comparatively, Lemonade has a beta of 2.04, indicating that its share price is 104% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations for Prudential Financial and Lemonade, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Prudential Financial	2	10	0	0	1.83
Lemonade	3	1	5	0	2.22

Prudential Financial currently has a consensus price target of $108.00, suggesting a potential upside of 12.04%. Lemonade has a consensus price target of $68.75, suggesting a potential upside of 3.96%. Given Prudential Financial’s higher possible upside, equities research analysts clearly believe Prudential Financial is more favorable than Lemonade.

Summary

Prudential Financial beats Lemonade on 8 of the 14 factors compared between the two stocks.

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.

About Lemonade

Lemonade, Inc. provides various insurance products through various channels in the United States, Europe, and the United Kingdom. Its insurance products include stolen or damaged property, and personal liability that protects its customers if they are responsible for an accident or damage to another person or their property. The company also offers renters, homeowners, car, pet, and life insurance products, as well as landlord insurance policies. In addition, it operates as an agent for other insurance companies. The company was formerly known as Lemonade Group, Inc. and changed its name to Lemonade, Inc. Lemonade, Inc. was incorporated in 2015 and is headquartered in New York, New York.