Head to Head Review: GWG Holdings (GWGH) and Prudential Financial (PRU)

GWG Holdings (NASDAQ: GWGH) and Prudential Financial (NYSE:PRU) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, profitability, analyst recommendations, dividends, valuation, earnings and risk.

Profitability

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

Net Margins Return on Equity Return on Assets
GWG Holdings -21.92% -184.34% 4.35%
Prudential Financial 7.15% 8.98% 0.56%

Analyst Ratings

This is a summary of recent ratings for GWG Holdings and Prudential Financial, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
GWG Holdings 0 0 2 0 3.00
Prudential Financial 0 7 5 0 2.42

GWG Holdings currently has a consensus target price of $14.50, suggesting a potential upside of 41.46%. Prudential Financial has a consensus target price of $114.70, suggesting a potential upside of 5.17%. Given GWG Holdings’ stronger consensus rating and higher possible upside, equities research analysts clearly believe GWG Holdings is more favorable than Prudential Financial.

Risk and Volatility

GWG Holdings has a beta of 0.49, suggesting that its stock price is 51% less volatile than the S&P 500. Comparatively, Prudential Financial has a beta of 1.51, suggesting that its stock price is 51% more volatile than the S&P 500.

Insider & Institutional Ownership

42.5% of GWG Holdings shares are held by institutional investors. Comparatively, 64.5% of Prudential Financial shares are held by institutional investors. 77.4% of GWG Holdings shares are held by insiders. Comparatively, 0.7% of Prudential Financial shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares GWG Holdings and Prudential Financial’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
GWG Holdings $62.55 million 0.95 -$15.50 million ($2.68) -3.82
Prudential Financial $59.25 billion 0.79 $7.12 billion $8.92 12.23

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

Dividends

Prudential Financial pays an annual dividend of $3.00 per share and has a dividend yield of 2.8%. GWG Holdings does not pay a dividend. Prudential Financial pays out 33.6% of its earnings in the form of a dividend. Prudential Financial has increased its dividend for 8 consecutive years.

Summary

Prudential Financial beats GWG Holdings on 10 of the 16 factors compared between the two stocks.

GWG Holdings Company Profile

GWG Holdings, Inc. is the parent company of GWG Life, is a financial services company. The Company is focused on transforming the life insurance industry through its products and services. The Company has developed a new suite of options for the life insurance secondary market called LifeCare Xchange (LCX). This new capability provides seniors with the exchange value of their life insurance policies they can apply to long-term care and other post-retirement needs. Through its subsidiary GWG Life, LLC, seeks to further transform the industry by applying proprietary M-Panel epigenetic technology to disrupt traditional life insurance underwriting practices.

Prudential Financial Company Profile

Prudential Financial, Inc., is a financial services company. The Company, through its subsidiaries, offers a range of financial products and services, which includes life insurance, annuities, retirement-related services, mutual funds and investment management. The Company’s operations consists of four divisions, which together encompass seven segments. The U.S. Retirement Solutions and Investment Management division consists of Individual Annuities, Retirement and Asset Management segments. The U.S. Individual Life and Group Insurance division consists of Individual Life and Group Insurance segments. The International Insurance division consists of International Insurance segment. The Closed Block division consists of Closed Block segment. The Company has operations in the United States, Asia, Europe and Latin America.

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