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Is Principal Financial Group (PFG) a Suitable Value Pick?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Principal Financial Group, Inc. (PFG - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Principal Financial Group has a trailing twelve months PE ratio of 13.19. This level compares pretty favorably with the market at large, as the PE ratio for the S&P 500 comes in at about 19.97.
If we focus on the long-term trend of the stock the current level puts Lazard’s current PE among its highs over the observed period. This suggests that the stock is overvalued compared to its own historical levels.
Notably, the stock’s PE compares favorably with the Zacks classified Finance - Investment Management industry’s trailing twelve months PE ratio, which stands at 13.39. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Principal Financial Group has a forward PE ratio (price relative to this year’s earnings) of just 12.51, so it is fair to say that a slightly more value-oriented path may be ahead for Principal Financial Group stock in the near term too.
PS Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Principal Financial Group has a P/S ratio of about 1.51. This is lower than the Zacks categorized Finance - Investment Management industry average, which comes in at 3.43 right now.
PFG is actually in the higher zone of its trading range in the time period per the P/S metric, which suggests that the company’s stock price has already appreciated to some degree, relative to its sales.
Broad Value Outlook
In aggregate, Principal Financial Group currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Principal Financial Group a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Principal Financial Group is just 1.38, a level that is lower than the industry average of 1.45. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, AAPL is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Principal Financial Group might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘D’ and a Momentum score of ‘C’. This gives PFG a Zacks VGM score—or its overarching fundamental grade—of ‘B’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s earnings estimates have been trending upwards lately. The current quarter has seen three estimates go higher in the past sixty days compared to none lower, while the full year estimate has seen five upward revisions and no downward revision in the same time period.
This has had a meaningful impact on the consensus estimate as the current quarter consensus estimate has moved higher by 0.8% over the past two months, while the full year estimate has increased 3.9%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This positive trend signifies bullish analyst sentiment, and its Zacks Rank #2 (Buy) indicates robust fundamentals and expectations of outperformance in the near term.
Bottom Line
Principal Financial Group is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Boasting a good industry rank (Top 40% out of more than 250 industries) and a strong Zacks Rank, the company deserves attention right now.
Principal Financial Group’s inorganic story remains impressive with buyouts strengthening its international footprint. It also remains focused on effective capital deployment to enhance shareholder value. However, the company’s investment results will likely be hurt by a soft interest rate environment, restricting any major improvement. Nevertheless, focus on fee-based revenue sources has been helping it to earn steadily, and limits exposure to the interest rate environment. Annuity and insurance business also offer sustained earnings growth.
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 "Strong Sells". Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>
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Is Principal Financial Group (PFG) a Suitable Value Pick?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Principal Financial Group, Inc. (PFG - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Principal Financial Group has a trailing twelve months PE ratio of 13.19. This level compares pretty favorably with the market at large, as the PE ratio for the S&P 500 comes in at about 19.97.
If we focus on the long-term trend of the stock the current level puts Lazard’s current PE among its highs over the observed period. This suggests that the stock is overvalued compared to its own historical levels.
Notably, the stock’s PE compares favorably with the Zacks classified Finance - Investment Management industry’s trailing twelve months PE ratio, which stands at 13.39. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Principal Financial Group has a forward PE ratio (price relative to this year’s earnings) of just 12.51, so it is fair to say that a slightly more value-oriented path may be ahead for Principal Financial Group stock in the near term too.
PS Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Principal Financial Group has a P/S ratio of about 1.51. This is lower than the Zacks categorized Finance - Investment Management industry average, which comes in at 3.43 right now.
PFG is actually in the higher zone of its trading range in the time period per the P/S metric, which suggests that the company’s stock price has already appreciated to some degree, relative to its sales.
Broad Value Outlook
In aggregate, Principal Financial Group currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Principal Financial Group a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Principal Financial Group is just 1.38, a level that is lower than the industry average of 1.45. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, AAPL is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Principal Financial Group might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘D’ and a Momentum score of ‘C’. This gives PFG a Zacks VGM score—or its overarching fundamental grade—of ‘B’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s earnings estimates have been trending upwards lately. The current quarter has seen three estimates go higher in the past sixty days compared to none lower, while the full year estimate has seen five upward revisions and no downward revision in the same time period.
This has had a meaningful impact on the consensus estimate as the current quarter consensus estimate has moved higher by 0.8% over the past two months, while the full year estimate has increased 3.9%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Principal Financial Group Inc Price and Consensus
Principal Financial Group Inc Price and Consensus | Principal Financial Group Inc Quote
This positive trend signifies bullish analyst sentiment, and its Zacks Rank #2 (Buy) indicates robust fundamentals and expectations of outperformance in the near term.
Bottom Line
Principal Financial Group is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Boasting a good industry rank (Top 40% out of more than 250 industries) and a strong Zacks Rank, the company deserves attention right now.
Principal Financial Group’s inorganic story remains impressive with buyouts strengthening its international footprint. It also remains focused on effective capital deployment to enhance shareholder value. However, the company’s investment results will likely be hurt by a soft interest rate environment, restricting any major improvement. Nevertheless, focus on fee-based revenue sources has been helping it to earn steadily, and limits exposure to the interest rate environment. Annuity and insurance business also offer sustained earnings growth.
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 "Strong Sells". Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>