Prudential reports 73.9% revenue growth in FY2016
14 Mar 2017 • About Prudential (
$PRU) • By InTwits
Prudential reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Prudential doesn't have a profitable business model yet: FY2016 ROIC is 0.6%
- Prudential has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.4%.
- The company has potentially unprofitable business model: ROIC is at 0.6%
- It operates with high leverage: Net Debt/EBITDA is 6.1x while industry average is
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Prudential ($PRU) key annual financial indicators
| mln. £ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 54,438 | 52,375 | 60,126 | 41,305 | 71,842 | 73.9% |
| Net Income | 2,163 | 1,346 | 2,216 | 2,579 | 1,921 | -25.5% |
Balance Sheet
|
|---|
| Cash | 6,126 | 6,785 | 6,409 | 7,782 | 10,065 | 29.3% |
| Short Term Debt | 3,213 | 3,047 | 3,356 | 3,292 | 3,666 | 11.4% |
| Long Term Debt | 3,554 | 4,636 | 4,304 | 5,011 | 6,798 | 35.7% |
Cash flow
|
|---|
| Capex | 139 | 221 | 172 | 256 | 348 | 35.9% |
Ratios
|
|---|
| Revenue growth | 49.1% | -3.8% | 14.8% | -31.3% | 73.9% | |
| Net Income Margin | 4.0% | 2.6% | 3.7% | 6.2% | 2.7% | -3.6% |
| CAPEX, % of revenue | 0.3% | 0.4% | 0.3% | 0.6% | 0.5% | -0.1% |
| ROIC | 1.1% | 0.6% | 0.8% | 0.9% | 0.6% | -0.3% |
| ROE | 22.9% | 13.5% | 20.7% | 20.8% | 13.9% | -6.9% |
Revenue and profitability
The company's Revenue jumped on 73.9% in FY2016.
Net Income marign decreased on 3.6 pp from 6.2% to 2.7% in FY2016.
Capital expenditures (CAPEX) and working capital investments
Prudential's CAPEX/Revenue was 0.48% in FY2016. The company showed almost no change in CAPEX/Revenue from FY2013 to FY2016. Average CAPEX/Revenue for the last three years was 0.46%.
Return on investment
The company operates at good ROE (13.91%) while ROIC is low (0.62%). ROIC showed almost no change in FY2016. ROE decreased on 6.9 pp from 20.8% to 13.9% in FY2016.
Leverage (Debt)
Debt surged on 26.0% in FY2016 while cash jumped on 29.3% in FY2016.
Management team
The company's CEO Michael A Wells "Mike" is a founder and has spent 3 years at the company. Nicolaos Andreas Nicandrou is a Prudential's CFO. Nicolaos Andreas Nicandrou has spent 9 years at the company.
Appendix 1: Peers in Life Insurance
Below we provide Prudential benchmarking against other companies in Life Insurance industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Cathay Financial Hldg Co ($CFHS) | -25.4% | 58.9% | 14.8% | 9.3% | |
| Sagicor Financial Corp ($SFI) | 12.7% | -2.3% | -2.8% | 7.5% | |
| Shin Kong Financial Hldg Co ($SKFS) | | 0.8% | 21.5% | 6.2% | 10.4% |
| Torchmark Corp ($TMK) | | 5.1% | -4.0% | 4.0% | 4.5% |
| Partnership Assurance Group ($PA.) | 30.0% | -19.5% | 30.9% | -36.2% | |
| |
|---|
| Median (7 companies) | 12.7% | -2.3% | 14.8% | 4.0% | 60.5% |
|---|
| Prudential ($PRU) | | -3.8% | 14.8% | -31.3% | 73.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Sagicor Financial Corp ($SFI) | 1.9% | 1.8% | 2.1% | 1.6% | |
| Torchmark Corp ($TMK) | 0.1% | 0.3% | 0.5% | 1.0% | 0.6% |
| Shin Kong Financial Hldg Co ($SKFS) | 0.4% | 0.3% | 0.4% | 0.8% | 0.4% |
| Aviva ($AV.A) | 0.5% | 0.1% | 0.3% | 0.2% | 0.1% |
| Cathay Financial Hldg Co ($CFHS) | 1.1% | 0.3% | 0.2% | 0.2% | |
| |
|---|
| Median (7 companies) | 0.4% | 0.3% | 0.3% | 0.2% | 0.3% |
|---|
| Prudential ($PRU) | 0.3% | 0.4% | 0.3% | 0.6% | 0.5% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Torchmark Corp ($TMK) | 5.4% | 4.9% | 4.6% | 4.3% | 4.2% |
| Cathay Financial Hldg Co ($CFHS) | 0.6% | 0.9% | 1.3% | 1.3% | |
| Aviva ($AV.A) | 0.4% | 0.7% | 1.0% | 0.6% | 0.4% |
| Shin Kong Financial Hldg Co ($SKFS) | 0.8% | 0.8% | 0.7% | 0.5% | 0.4% |
| Standard Life ($SL.) | 0.7% | 0.5% | 0.5% | 0.4% | 0.5% |
| |
|---|
| Median (7 companies) | 0.7% | 0.9% | 0.9% | 0.6% | 0.5% |
|---|
| Prudential ($PRU) | 1.1% | 0.6% | 0.8% | 0.9% | 0.6% |
