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Why Is Principal Financial (PFG) Up 1.7% Since Last Earnings Report?
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It has been about a month since the last earnings report for Principal Financial (PFG - Free Report) . Shares have added about 1.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Principal Financial due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Principal Financial Q1 Earnings Beat, Revenues Miss
Principal Financial's first-quarter 2021 operating net income of $1.53 per share beat the Zacks Consensus Estimate by 13.3%. Also, the bottom line increased 33% year over year.
Principal Financial witnessed higher revenues across most of its business lines, lower expenses and higher assets under management (AUM).
Behind the Headlines
Operating revenues decreased 29.7% year over year to $3.1 billion due to lower premiums and other considerations, partly offset by higher net investment income and fees and other revenues. Moreover, the top line missed the Zacks Consensus Estimate by 17.5%.
Total expenses decreased 38.6% year over year to $2.6 billion due to lower benefits, claims and settlement expenses, dividends to policyholders as well as operating expenses.
Principal Financial’s AUM as of Mar 31, 2021 amounted to $820.3 billion, up 29.9% year over year.
Segment Update
Retirement and Income Solution: Revenues decreased nearly 53% year over year to about $1.2 billion due to lower premiums and other considerations, partly offset by higher fees and other revenues and net investment income.
Pre-tax operating earnings increased 40.4% year over year to $288 million on account of weak performance at Retirement and Income Solution — Fee business and Spread business.
Principal Global Investors: Revenues of $415.2 million were up 6.2% from the prior-year quarter driven by higher fees and other revenues.
Operating earnings increased 26.8% year over year to $141.7 million due to growth in management fees resulting from an increase in AUM and disciplined expense management.
Principal International: Revenues increased 2.5% year over year to $308 million in the quarter due to higher fees and other revenues and net investment income.
Operating earnings increased more than two-fold year over year to $75.1 million due to higher combined net revenues (at PFG share).
U.S. Insurance Solution: Revenues grew 4.6% year over year to $1.2 billion driven by higher premiums and other considerations, net investment income, fees and other revenues.
Operating earnings of $95.2 million decreased 26.5% year over year, mainly due to poor performance at Specialty Benefits Insurance business.
Corporate: Operating loss of $93.8 million was wider than $91.1 million loss incurred a year ago. This downside was due to lower net investment income.
Financial Update
As of Mar 31, 2021, cash and cash equivalents were $2 billion, down 42.5% year over year.
At first-quarter end, debt was $4.3 billion, up 16.6% year over year.
As of Mar 31, 2021, book value per share (excluding AOCI other than foreign currency translation adjustment) was $48.01, up 1.9% year over year.
Dividend and Share Repurchase Update
The company paid out $152.2 million in dividends and deployed $100 million to buy back 1.9 million shares in the quarter under review.
The board of directors approved second-quarter dividend of 61 cents per share, up 9% year over year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, Principal Financial has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Principal Financial has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Principal Financial (PFG) Up 1.7% Since Last Earnings Report?
It has been about a month since the last earnings report for Principal Financial (PFG - Free Report) . Shares have added about 1.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Principal Financial due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Principal Financial Q1 Earnings Beat, Revenues Miss
Principal Financial's first-quarter 2021 operating net income of $1.53 per share beat the Zacks Consensus Estimate by 13.3%. Also, the bottom line increased 33% year over year.
Principal Financial witnessed higher revenues across most of its business lines, lower expenses and higher assets under management (AUM).
Behind the Headlines
Operating revenues decreased 29.7% year over year to $3.1 billion due to lower premiums and other considerations, partly offset by higher net investment income and fees and other revenues. Moreover, the top line missed the Zacks Consensus Estimate by 17.5%.
Total expenses decreased 38.6% year over year to $2.6 billion due to lower benefits, claims and settlement expenses, dividends to policyholders as well as operating expenses.
Principal Financial’s AUM as of Mar 31, 2021 amounted to $820.3 billion, up 29.9% year over year.
Segment Update
Retirement and Income Solution: Revenues decreased nearly 53% year over year to about $1.2 billion due to lower premiums and other considerations, partly offset by higher fees and other revenues and net investment income.
Pre-tax operating earnings increased 40.4% year over year to $288 million on account of weak performance at Retirement and Income Solution — Fee business and Spread business.
Principal Global Investors: Revenues of $415.2 million were up 6.2% from the prior-year quarter driven by higher fees and other revenues.
Operating earnings increased 26.8% year over year to $141.7 million due to growth in management fees resulting from an increase in AUM and disciplined expense management.
Principal International: Revenues increased 2.5% year over year to $308 million in the quarter due to higher fees and other revenues and net investment income.
Operating earnings increased more than two-fold year over year to $75.1 million due to higher combined net revenues (at PFG share).
U.S. Insurance Solution: Revenues grew 4.6% year over year to $1.2 billion driven by higher premiums and other considerations, net investment income, fees and other revenues.
Operating earnings of $95.2 million decreased 26.5% year over year, mainly due to poor performance at Specialty Benefits Insurance business.
Corporate: Operating loss of $93.8 million was wider than $91.1 million loss incurred a year ago. This downside was due to lower net investment income.
Financial Update
As of Mar 31, 2021, cash and cash equivalents were $2 billion, down 42.5% year over year.
At first-quarter end, debt was $4.3 billion, up 16.6% year over year.
As of Mar 31, 2021, book value per share (excluding AOCI other than foreign currency translation adjustment) was $48.01, up 1.9% year over year.
Dividend and Share Repurchase Update
The company paid out $152.2 million in dividends and deployed $100 million to buy back 1.9 million shares in the quarter under review.
The board of directors approved second-quarter dividend of 61 cents per share, up 9% year over year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, Principal Financial has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Principal Financial has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.