PRUDENTIAL FINANCIAL INC

Where It Passes

Where It Falls Short

• Efficiency0% pass✗ 5▾

  All 4 investors flag PRU's efficiency

  Revenue / Total Assets Change YoY0.10x -> 0.08x

  ✗PiotroskiImproved YoY

  Return on Invested Capital

  ✗Munger> 15%

  ROIC (high and growing)FY2023: ROIC=unavailable; FY2024: ROIC=unavailable; FY2025: ROIC=unavailable

  ✗AkreLatest 3 consecutive FYs: ROIC > 15% in each

  Reinvestment Rate x ROIC

  ✗AkreReinvestment Rate * ROIC > 10%

  ROIC (5-year)

  ✗SleepROIC > 12% in a majority of years
• Growth13% pass✓ 2✗ 10▾

  7 of 8 flag PRU's growth — Graham, Lynch, Dreman +4 more

  EPS Growth (3-yr avg, 10-yr window)

  ✗Graham>= 33% growth

  Basic earnings-growth PEG (dividends excluded)P/E 12.4x (growth N/A)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR-15.4%

  ✗Lynch15-30% (Fast Grower); > 0% to pass

  EPS Growth Direction

  ✗DremanPositive over recent years

  EPS CAGR

  ✗Dreman> 5% annualized

  Positive Net Income Frequency24/28 years positive

  ✓MarksPositive net income in >= 7 of last 10 years

  3yr Median Revenue Growth-5.1%

  ✗Ackman>= 5%

  Positive EPS Growth Frequency4/5 years with positive EPS growth

  ✓AckmanPositive EPS growth in >= 3 of last 5 years

  5-Year EPS CAGR-15.4% CAGR over 4 years

  ✗Templeton> 0% (5-year EPS CAGR)

  Revenue growth vs. gross and operating margin trend

  ✗SleepRevenue rising; gross margin flat or falling; operating margin holding

  5-year Revenue CAGR1.3%

  ✗SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR-15.4% over 4 years

  ✗Neff7%-20% annualized
• Valuation17% pass✓ 9✗ 17▾

  10 of 12 flag PRU's valuation — Graham, Lynch, Dreman +7 more

  Price / Book Value per Share1.3x

  ✗Dreman< 1.2x✓Templeton< 1.5x✗SchlossP/B <= 0.80x (app cutoff)

  Net income / market capitalization+9.14%; #777/6340 (top 12.3%)

  ✓AsnessTop 30% of eligible cross-section✗OshaughnessyTop 10% of eligible cross-section

  Price / 3-yr avg EPS15.3x

  ✗Graham<= 15x

  Price-to-Book Ratio1.3x

  ✓Graham<= 1.5x

  P/E x P/B20.30

  ✓Graham<= 22.5

  Basic earnings-growth PEG (dividends excluded)P/E 12.4x (growth N/A)

  ✗Lynch< 1.0 (ideally < 0.5)

  Price / EPS12.4x

  ✗Dreman< 12x✗Templeton< 12x (fixed ceiling; proxy for the market's cheapest 40%)

  Price / (CFO / Shares)6.9x

  ✓Dreman< 8x

  Valuation ReasonablenessP/E=12.4x, OE Yield=8.6%

  ✓MungerP/E < 25 or Owner Earnings Yield > 5%

  P/E or FCF YieldP/E=12.4x

  ✓PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical AverageP/E=12.4x, P/B=1.3x

  ✓MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic Value-2.0% (IV=$121.15 vs Price=$123.55)

  ✗Marks>= 20% below intrinsic value

  Price / FCF per Share

  ✗Ackman<= 25

  Price vs. Trailing Low126% of trailing low ($97.69)

  ✗Templeton<= 120% of trailing low (certified split-adjusted live window)

  Positive book equity / market capitalization+0.6964; #2214/6449 (top 34.3%)

  ✗AsnessTop 30% of eligible cross-section

  Price / Diluted EPS12.4x

  ✓NeffP/E <= 15x (app proxy for a P/E 40%-60% below the market)

  (EPS CAGR % + Dividend Yield %) / P/E-0.88

  ✗Neff> 0.7 (Neff's published traditional edge)

  Price / Tangible Book Value per Share1.39x

  ✗SchlossP/TBV <= 1.00x (app cutoff)

  Book Value per Share Change-45.2%

  ✗SchlossLatest BVPS >= earliest BVPS over >= 3 years (app rule)

  Revenue / market capitalization+1.4471; #1377/5247 (top 26.2%)

  ✗OshaughnessyTop 10% of eligible cross-section

  (Operating cash flow - capex) / market capitalization

  ✗OshaughnessyTop 10% of eligible cross-section

  Trailing six-month price return through the evaluation date+22.76%; #1232/6202 (top 19.9%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Profitability20% pass✓ 10✗ 22▾

  12 of 15 flag PRU's profitability — Graham, Buffett, Lynch +9 more

  Net income / market capitalization+9.14%; #777/6340 (top 12.3%)

  ✓AsnessTop 30% of eligible cross-section✗OshaughnessyTop 10% of eligible cross-section

  Positive EPS (10 years)18/28 years positive

  ✗GrahamPositive EPS every year for 10 years

  EPS Growth (3-yr avg, 10-yr window)

  ✗Graham>= 33% growth

  Net Income Positive (10+ years)24/28 years positive

  ✗BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)7.7%

  ✗Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)1.3% (latest)

  ✗BuffettStable or rising over 10 years

  Free Cash Flow Proxy

  ✗BuffettPositive and growing

  Earnings Variance (10-yr CoV)

  ✗BuffettCoV < 0.3

  Retained Earnings Effectiveness

  ✗Buffett$1 retained -> > $1 market value created

  Basic earnings-growth PEG (dividends excluded)P/E 12.4x (growth N/A)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR-15.4%

  ✗Lynch15-30% (Fast Grower); > 0% to pass

  ROE13.1%

  ✗Lynch> 15%

  Net Income / Total Assets0.46%

  ✓PiotroskiROA > 0

  ROA Change YoY0.37% -> 0.46% (delta: +0.09%)

  ✓PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=0.81%, ROA=0.46%

  ✓PiotroskiCFO/Assets > ROA

  Pre-Tax Income / Revenue7.8%

  ✗Dreman>= 8%

  Net Income / Shareholders' Equity13.1%

  ✓Dreman> 12%

  Margin of SafetyP/E=12.4x, P/B=1.3x

  ✓PabraiP/B < 1.5 or P/E < 15

  Return on Equity9.9% (3-yr avg)

  ✗AkreROE > 20% (3-year avg)

  Discount to Intrinsic Value-2.0% (IV=$121.15 vs Price=$123.55)

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency24/28 years positive

  ✓MarksPositive net income in >= 7 of last 10 years

  Operating Income / Revenue

  ✗Ackman>= 15%

  Net Income / Shareholders Equity13.1%

  ✗Ackman>= 15%

  5-Year EPS CAGR-15.4% CAGR over 4 years

  ✗Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend

  ✗TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trend

  ✗SleepRevenue rising; gross margin flat or falling; operating margin holding

  Gross profit / total assets

  ✗AsnessTop 30% of eligible cross-section

  Net income / positive book equity+13.13%; #1360/5226 (top 26.0%)

  ✓AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.0038; #394/5884 (top 6.7%)

  ✓AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR-15.4% over 4 years

  ✗Neff7%-20% annualized

  Positive Diluted-EPS Years8/10 years positive

  ✓Schloss>= 70% positive over 5-10 observed years (app rule)
• Debt & Leverage36% pass✓ 5✗ 8▾

  7 of 11 flag PRU's debt & leverage — Buffett, Lynch, Munger +4 more

  Debt/Equity & Interest CoverageD/E: 0.63, IC: N/A

  ✗BuffettD/E < 0.5 AND Interest Coverage > 5x

  Total Debt / Equity0.70

  ✗Lynch< 0.33

  Cash - Long-term Debt$-1.1B

  ✗LynchPositive preferred

  LT Debt / Total Assets Change2.61% -> 2.44%

  ✓PiotroskiDecreased YoY

  Total Debt / Shareholders' Equity0.70

  ✓Dreman< 0.8✓Templeton< 1.0 (fixed cap; proxy for below-sector-median leverage)✓SchlossD/E < 1.00x

  Debt Levels0.70

  ✗MungerDebt/Equity < 0.5✗AkreDebt/Equity < 0.3

  Interest Coverage & Debt/EBITDA

  ✗MarksInterest Coverage > 3x; Debt/EBITDA < 4x

  Total Debt / Shareholders Equity0.70

  ✓Ackman<= 1.0

  Negative debt-to-equity (higher means less debt)-0.7024; #2845/4210 (top 67.6%)

  ✗AsnessTop 30% of eligible cross-section

  Current Assets / Current Liabilities

  ✗SchlossCurrent ratio >= 1.50x (app cutoff)
• Cash Flow40% pass✓ 5✗ 7▾

  6 of 10 flag PRU's cash flow — Buffett, Lynch, Marks +3 more

  Free Cash Flow Proxy

  ✗BuffettPositive and growing

  FCF Positive and Growing

  ✗LynchPositive and growing

  Operating Cash Flow$6.3B

  ✓PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=0.81%, ROA=0.46%

  ✓PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)6.9x

  ✓Dreman< 8x

  P/E or FCF YieldP/E=12.4x

  ✓PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive

  ✗MarksPositive FCF in majority of recent years

  (OCF - CapEx) / Market Cap

  ✗Ackman>= 4%

  Price / FCF per Share

  ✗Ackman<= 25

  Positive Operating Cash Flow frequency26/26 years positive

  ✓SleepPositive OCF in >= 70% of available years

  Operating Cash Flow - Capital Expenditures

  ✗Neff> $0 (app proxy for a strong fundamental case)

  (Operating cash flow - capex) / market capitalization

  ✗OshaughnessyTop 10% of eligible cross-section
• Verdicts46% pass✓ 6✗ 7▾

  Split decision: 7 FAIL · 5 PASS · 3 NEUTRAL · 1 BUY

  Overall verdict

  ✓GrahamPASS (4/7)✗BuffettFAIL (0/7)✗LynchFAIL (0/6)✓PiotroskiBUY (F-Score 6)✓DremanPASS (5/10)✓MungerPASS (2/4)•PabraiNEUTRAL (2/3)✗AkreFAIL (0/6)✗MarksFAIL (2/5)✓AckmanPASS (4/9)✓TempletonPASS (4/8)✗SleepFAIL (2/6)•AsnessNEUTRAL (Not ranked)✗NeffFAIL (3/6)✗SchlossFAIL (3/7)•OshaughnessyNEUTRAL (Not ranked)
• Valuation models50% pass✓ 3✗ 3▾

  Models split on PRU at $123.55 — fair values range $58.83–$144.75

  Graham fair value$144.75

  ✓Graham+14.6% margin vs $123.55

  Dreman fair value$121.15

  ✗Dreman-2.0% margin vs $123.55

  Pabrai fair value$58.83

  ✗Pabrai-110.0% margin vs $123.55

  Akre fair value$130.39

  ✓Akre+5.2% margin vs $123.55

  Marks fair value$132.48

  ✓Marks+6.7% margin vs $123.55

  Templeton fair value$90.85

  ✗Templeton-36.0% margin vs $123.55