Sompo (OTCMKTS:SMPNY) vs. Prudential Financial (NYSE:PRU) Critical Comparison

Prudential Financial (NYSE:PRU) and Sompo (OTCMKTS:SMPNY) are both large-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their profitability, valuation, analyst recommendations, risk, earnings, dividends and institutional ownership.

Insider and Institutional Ownership

56.8% of Prudential Financial shares are held by institutional investors. 0.1% of Prudential Financial shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

Prudential Financial pays an annual dividend of $5.60 per share and has a dividend yield of 5.4%. Sompo pays an annual dividend of $0.28 per share and has a dividend yield of 1.5%. Prudential Financial pays out 57.6% of its earnings in the form of a dividend. Sompo pays out 12.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Prudential Financial has raised its dividend for 2 consecutive years. Prudential Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Prudential Financial and Sompo, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Prudential Financial	6	9	0	0	1.60
Sompo	0	0	0	0	0.00

Prudential Financial currently has a consensus target price of $101.50, suggesting a potential downside of 1.23%. Given Prudential Financial’s stronger consensus rating and higher probable upside, analysts plainly believe Prudential Financial is more favorable than Sompo.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Prudential Financial	5.83%	16.33%	0.68%
Sompo	11.95%	13.42%	3.89%

Valuation and Earnings

This table compares Prudential Financial and Sompo”s top-line 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	0.62	$3.58 billion	$9.72	10.57
Sompo	$35.69 billion	0.97	$4.25 billion	$2.34	7.96

Sompo has lower revenue, but higher earnings than Prudential Financial. Sompo 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 & Risk

Prudential Financial has a beta of 0.86, indicating that its share price is 14% less volatile than the S&P 500. Comparatively, Sompo has a beta of 0.33, indicating that its share price is 67% less volatile than the S&P 500.

Summary

Prudential Financial beats Sompo on 11 of the 16 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 Sompo

Sompo Holdings, Inc. provides property and casualty (P&C) insurance services in Japan and internationally. The company operates through Domestic P&C Insurance Business, Overseas Insurance Business, Domestic Life Insurance Business, and Nursing Care & Seniors Business segments. It offers various P&C insurance products, including automobile, fire, personal accident, and marine, as well as security, risk management, assistance, and warranty services; and life insurance products. The company also provides nursing care and seniors services; and customer security, health, and wellbeing support services. In addition, it offers asset management services; home remodeling services; and health support services comprising health guidance and employee assistance programs. The company was formerly known as Sompo Japan Nipponkoa Holdings, Inc. and changed its name to Sompo Holdings, Inc. in October 2016. The company was incorporated in 2010 and is headquartered in Tokyo, Japan.