Principal Financial Group, Inc. (PFG - Free Report) continues to be an investor favorite on the back of its growth in fee-based businesses, foreign currency tailwinds and a positive net cash flow.
Growth Projections
The Zacks Consensus Estimate for 2021 and 2022 earnings per share is pegged at $6.49 and $7.06, indicating an increase of 31.3% and 8.8%, respectively, from the corresponding year-ago reported figures. The expected long-term earnings growth rate is pegged at 15.2%.
Estimate Revision
The Zacks Consensus Estimate for 2021 and 2022 earnings has moved 3% and 1.6% 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 rallied 30.8%, outperforming the industry’s increase of 28.3% year to date.
Business Tailwinds
The Principal International segment of Principal Financial expects to deliver 8-12% growth in revenues for 2021 excluding significant variances and the segment’s operating earnings should gain from foreign currency tailwinds.
Principal Financial targets earnings per share growth of 9-12%, which it projects to achieve through a narrowed focus on higher growth and more capital-efficient businesses. Moreover, it expects to generate 70-80% free capital conversion.
With positive net cash flow, strategic buyouts and operational discipline, Principal Financial’s assets under management should continue to benefit.
The investment manager has always emphasized on fee-based businesses and focused on retirement in the United States and the select emerging markets, global asset management, and the U.S. specialty benefits and protection in the small-to-medium-sized business market. These businesses are well poised for long-term growth, capital-efficiency and higher fee-based revenues.
It also continues to maintain a robust financial position with $2.5 billion of excess and available capital that includes $1.7 billion at the holding company, more than double the $800-million target to cover the next 12 months of obligations, $325 million in excess of the targeted 400% risk-based capital ratio, which was estimated to be 421% as well as $460 million of available cash in its subsidiaries.
Moreover, it maintained a leverage ratio of 20-25% and expects to pay down $300 million of long-term debt when it matures in late 2022.
The company hiked its dividend by 13% in the third quarter and currently yields 3.9%, better than the industry average of 2.3%. For 2021, it continues to target a 40% dividend payout ratio.
In June 2021, the board approved a $1.2-billion buyback program and estimates $1.4-1.8 billion of capital deployment including $600-$800 million of share repurchases for the current year. This makes the stock an attractive pick for yield-seeking investors. Also, the impact of credit drift and credit losses is expected to remain insignificant for 2021.
Stocks to Consider
Some better-ranked stocks from the finance sector are Affiliated Managers Group, Inc. (AMG - Free Report) , Apollo Global Management, Inc. (APO - Free Report) and Ares Management Corporation (ARES - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings of Affiliated Managers surpassed estimates in each of the last four quarters, the average being 8.36%.
Apollo Global’s bottom line surpassed estimates in three of the last four quarters, missing the mark in the remaining one, the average beat being 23.57%.
Ares Management’s earnings surpassed estimates in three of the last four quarters, missing the same in the remaining one, the average beat being 13.12%.
Zacks Naming Top 10 Stocks for 2024
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History suggests their performance could be sensational.
From 2012 (when our Director of Research, Sheraz Mian assumed responsibility for the portfolio) through November, 2023, the Zacks Top 10 Stocks gained +974.1%, nearly TRIPLING the S&P 500’s +340.1%. Now Sheraz is combing through 4,400 companies to handpick the best 10 tickers to buy and hold in 2024. Don’t miss your chance to get in on these stocks when they’re released on January 2.
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Principal Financial Group, Inc. (PFG - Free Report) continues to be an investor favorite on the back of its growth in fee-based businesses, foreign currency tailwinds and a positive net cash flow.
Growth Projections
The Zacks Consensus Estimate for 2021 and 2022 earnings per share is pegged at $6.49 and $7.06, indicating an increase of 31.3% and 8.8%, respectively, from the corresponding year-ago reported figures. The expected long-term earnings growth rate is pegged at 15.2%.
Estimate Revision
The Zacks Consensus Estimate for 2021 and 2022 earnings has moved 3% and 1.6% 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 rallied 30.8%, outperforming the industry’s increase of 28.3% year to date.
Business Tailwinds
The Principal International segment of Principal Financial expects to deliver 8-12% growth in revenues for 2021 excluding significant variances and the segment’s operating earnings should gain from foreign currency tailwinds.
Principal Financial targets earnings per share growth of 9-12%, which it projects to achieve through a narrowed focus on higher growth and more capital-efficient businesses. Moreover, it expects to generate 70-80% free capital conversion.
With positive net cash flow, strategic buyouts and operational discipline, Principal Financial’s assets under management should continue to benefit.
The investment manager has always emphasized on fee-based businesses and focused on retirement in the United States and the select emerging markets, global asset management, and the U.S. specialty benefits and protection in the small-to-medium-sized business market. These businesses are well poised for long-term growth, capital-efficiency and higher fee-based revenues.
It also continues to maintain a robust financial position with $2.5 billion of excess and available capital that includes $1.7 billion at the holding company, more than double the $800-million target to cover the next 12 months of obligations, $325 million in excess of the targeted 400% risk-based capital ratio, which was estimated to be 421% as well as $460 million of available cash in its subsidiaries.
Moreover, it maintained a leverage ratio of 20-25% and expects to pay down $300 million of long-term debt when it matures in late 2022.
The company hiked its dividend by 13% in the third quarter and currently yields 3.9%, better than the industry average of 2.3%. For 2021, it continues to target a 40% dividend payout ratio.
In June 2021, the board approved a $1.2-billion buyback program and estimates $1.4-1.8 billion of capital deployment including $600-$800 million of share repurchases for the current year. This makes the stock an attractive pick for yield-seeking investors. Also, the impact of credit drift and credit losses is expected to remain insignificant for 2021.
Stocks to Consider
Some better-ranked stocks from the finance sector are Affiliated Managers Group, Inc. (AMG - Free Report) , Apollo Global Management, Inc. (APO - Free Report) and Ares Management Corporation (ARES - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings of Affiliated Managers surpassed estimates in each of the last four quarters, the average being 8.36%.
Apollo Global’s bottom line surpassed estimates in three of the last four quarters, missing the mark in the remaining one, the average beat being 23.57%.
Ares Management’s earnings surpassed estimates in three of the last four quarters, missing the same in the remaining one, the average beat being 13.12%.
Zacks Naming Top 10 Stocks for 2024
Want to be tipped off early to our 10 top picks for the entirety of 2024?
History suggests their performance could be sensational.
From 2012 (when our Director of Research, Sheraz Mian assumed responsibility for the portfolio) through November, 2023, the Zacks Top 10 Stocks gained +974.1%, nearly TRIPLING the S&P 500’s +340.1%. Now Sheraz is combing through 4,400 companies to handpick the best 10 tickers to buy and hold in 2024. Don’t miss your chance to get in on these stocks when they’re released on January 2.
Be First to New Top 10 Stocks >>
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