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Reasons Why Investors Should Retain Principal Financial (PFG)
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Principal Financial Group, Inc. (PFG - Free Report) has been favored by investors on the back of its strategic buyouts, strong retention, higher single premium annuity sales and effective capital deployment.
Optimistic Growth Projections
The Zacks Consensus Estimate for Principal Financial’s 2024 earnings per share indicates a year-over-year increase of 15% from the consensus estimate of 2023. The consensus estimate for revenues is pegged at $15.43 billion, implying a year-over-year improvement of 5.2% from the consensus mark of 2023.
The consensus estimate for 2025 earnings per share indicates a year-over-year increase of 10.8% from the consensus estimate of 2024. The consensus estimate for 2025 revenues is pinned at $16.35 billion, implying a year-over-year improvement of 5.9% from the consensus mark of 2024.
Northbound Estimate Revision
The Zacks Consensus Estimate for PFG’s 2024 and 2025 earnings has moved 1.2% and 1.8% north, respectively, in the past 60 days. This should instill investors' confidence in the stock.
Zacks Rank & Price Performance
Principal Financial currently carries a Zacks Rank #3 (Hold). The stock has gained 1.5% compared with the industry’s growth of 4.6% year to date.
Image Source: Zacks Investment Research
Business Tailwinds
Principal Financial’s revenue growth is expected to improve in the long run, riding on higher premiums and other considerations, fees and other revenues and improved net investment income across its segments.
The Principal International segment is likely to benefit from higher single premium annuity sales in Chile. The segment’s operating earnings should gain from foreign currency tailwinds.
The Specialty Benefits Insurance business should continue to gain from record sales, strong retention and employment growth. Growth in the business, favorable claims and disciplined expense management should benefit its pre-tax operating earnings.
Strong institutional flows across equities, real estate and specialty fixed income, highlighting the value of diversified distribution through its institutional, retail and retirement channels, are likely to drive positive net cash flow.
Principal Financial’s extensive distribution footprint, strategic buyouts and operational discipline should enhance the assets under management growth.
PFG boasts a strong capital position, with sufficient cash generation capabilities and liquidity. The company ended 2023 with $1.7 billion of excess and available capital. It includes around $935 million at the holding company, $375 million in subsidiaries and $375 million in excess of the targeted 400% risk-based capital ratio (RBC), which was 427% at the end of the same year. The estimated statutory RBC ratio for Principal Life Insurance Company of 427% is above the midpoint of the targeted RBC ratio range of 400%.
The insurer’s capital deployment through share buybacks and dividend payments looks impressive. The board raised the first-quarter 2024 dividend by 4%, bringing the trailing 12-month dividend to $2.65 per share. The increase is in line with the targeted 40% dividend payout ratio and reflects strong business performance.
PFG remains committed to returning excess capital to shareholders and targets $1.5 billion to $1.8 billion of capital deployments in 2024. As of Dec 31, 2023, approximately $0.3 billion remained under the company’s prior authorization.
Stocks to Consider
Some better-ranked stocks from the Financial - Investment Management sector are AssetMark Financial Holdings, Inc. (AMK - Free Report) , SEI Investments Company (SEIC - Free Report) and PennantPark Floating Rate Capital Ltd. (PFLT - Free Report) . While AssetMark Financial and SEI Investments sport a Zacks Rank #1 (Strong Buy) each, PennantPark carries a Zacks Rank #2 (Buy) at present. You can seethe complete list of today’s Zacks #1 Rank stocks here.
AssetMark Financial’s earnings surpassed the Zacks Consensus Estimate in two of the last four quarters and missed in the other two, the average being 0.81%. Year to date, shares of AMK have jumped 20.6%.
The Zacks Consensus Estimate for AMK’s 2024 and 2025 earnings implies year-over-year growth of 15.2% and 7%, respectively, from the consensus estimate of the corresponding years.
SEI Investments’ earnings surpassed estimates in one of the last four quarters, matched in the other two and missed in one, the average surprise being 0.26%. Year to date, shares of SEIC have gained 6.2%.
The Zacks Consensus Estimate for SEIC’s 2024 and 2025 earnings implies year-over-year growth of 17.9% and 7.7%, respectively, from the consensus estimate of the corresponding years.
PennantPark’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average being 8.78%. Year to date, shares of PFLT have lost 7.7%.
The Zacks Consensus Estimate for PFLT’s 2024 earnings has moved 2.3% north in the past 30 days.
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Reasons Why Investors Should Retain Principal Financial (PFG)
Principal Financial Group, Inc. (PFG - Free Report) has been favored by investors on the back of its strategic buyouts, strong retention, higher single premium annuity sales and effective capital deployment.
Optimistic Growth Projections
The Zacks Consensus Estimate for Principal Financial’s 2024 earnings per share indicates a year-over-year increase of 15% from the consensus estimate of 2023. The consensus estimate for revenues is pegged at $15.43 billion, implying a year-over-year improvement of 5.2% from the consensus mark of 2023.
The consensus estimate for 2025 earnings per share indicates a year-over-year increase of 10.8% from the consensus estimate of 2024. The consensus estimate for 2025 revenues is pinned at $16.35 billion, implying a year-over-year improvement of 5.9% from the consensus mark of 2024.
Northbound Estimate Revision
The Zacks Consensus Estimate for PFG’s 2024 and 2025 earnings has moved 1.2% and 1.8% north, respectively, in the past 60 days. This should instill investors' confidence in the stock.
Zacks Rank & Price Performance
Principal Financial currently carries a Zacks Rank #3 (Hold). The stock has gained 1.5% compared with the industry’s growth of 4.6% year to date.
Image Source: Zacks Investment Research
Business Tailwinds
Principal Financial’s revenue growth is expected to improve in the long run, riding on higher premiums and other considerations, fees and other revenues and improved net investment income across its segments.
The Principal International segment is likely to benefit from higher single premium annuity sales in Chile. The segment’s operating earnings should gain from foreign currency tailwinds.
The Specialty Benefits Insurance business should continue to gain from record sales, strong retention and employment growth. Growth in the business, favorable claims and disciplined expense management should benefit its pre-tax operating earnings.
Strong institutional flows across equities, real estate and specialty fixed income, highlighting the value of diversified distribution through its institutional, retail and retirement channels, are likely to drive positive net cash flow.
Principal Financial’s extensive distribution footprint, strategic buyouts and operational discipline should enhance the assets under management growth.
PFG boasts a strong capital position, with sufficient cash generation capabilities and liquidity. The company ended 2023 with $1.7 billion of excess and available capital. It includes around $935 million at the holding company, $375 million in subsidiaries and $375 million in excess of the targeted 400% risk-based capital ratio (RBC), which was 427% at the end of the same year.
The estimated statutory RBC ratio for Principal Life Insurance Company of 427% is above the midpoint of the targeted RBC ratio range of 400%.
The insurer’s capital deployment through share buybacks and dividend payments looks impressive. The board raised the first-quarter 2024 dividend by 4%, bringing the trailing 12-month dividend to $2.65 per share. The increase is in line with the targeted 40% dividend payout ratio and reflects strong business performance.
PFG remains committed to returning excess capital to shareholders and targets $1.5 billion to $1.8 billion of capital deployments in 2024. As of Dec 31, 2023, approximately $0.3 billion remained under the company’s prior authorization.
Stocks to Consider
Some better-ranked stocks from the Financial - Investment Management sector are AssetMark Financial Holdings, Inc. (AMK - Free Report) , SEI Investments Company (SEIC - Free Report) and PennantPark Floating Rate Capital Ltd. (PFLT - Free Report) . While AssetMark Financial and SEI Investments sport a Zacks Rank #1 (Strong Buy) each, PennantPark carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
AssetMark Financial’s earnings surpassed the Zacks Consensus Estimate in two of the last four quarters and missed in the other two, the average being 0.81%. Year to date, shares of AMK have jumped 20.6%.
The Zacks Consensus Estimate for AMK’s 2024 and 2025 earnings implies year-over-year growth of 15.2% and 7%, respectively, from the consensus estimate of the corresponding years.
SEI Investments’ earnings surpassed estimates in one of the last four quarters, matched in the other two and missed in one, the average surprise being 0.26%. Year to date, shares of SEIC have gained 6.2%.
The Zacks Consensus Estimate for SEIC’s 2024 and 2025 earnings implies year-over-year growth of 17.9% and 7.7%, respectively, from the consensus estimate of the corresponding years.
PennantPark’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average being 8.78%. Year to date, shares of PFLT have lost 7.7%.
The Zacks Consensus Estimate for PFLT’s 2024 earnings has moved 2.3% north in the past 30 days.