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

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

Institutional & Insider Ownership

56.8% of Prudential Financial shares are held by institutional investors. 48.3% of Goosehead Insurance shares are held by company insiders. Comparatively, 0.3% of Prudential Financial shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

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	8.55%	-34.60%	8.55%
Prudential Financial	6.20%	16.32%	0.68%

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations 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 price target of $84.00, suggesting a potential upside of 77.29%. Prudential Financial has a consensus price target of $117.11, suggesting a potential upside of 12.17%. Given Goosehead Insurance’s stronger consensus rating and higher possible upside, research analysts plainly believe Goosehead Insurance is more favorable than Prudential Financial.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Goosehead Insurance	$353.97 million	4.93	$30.43 million	$1.04	45.56
Prudential Financial	$57.68 billion	0.63	$3.58 billion	$10.00	10.44

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.

Dividends

Goosehead Insurance pays an annual dividend of $4.60 per share and has a dividend yield of 9.7%. Prudential Financial pays an annual dividend of $5.40 per share and has a dividend yield of 5.2%. Goosehead Insurance pays out 442.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Prudential Financial pays out 54.0% of its earnings in the form of a dividend. Prudential Financial has raised its dividend for 2 consecutive years.

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.

Summary

Goosehead Insurance beats Prudential Financial on 10 of the 17 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.