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Principal Financial (PFG) Q1 Earnings Beat, Revenues Miss

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Principal Financial Group, Inc.’s (PFG - Free Report) 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).

Principal Financial Group, Inc. Price, Consensus and EPS Surprise

  Principal Financial Group, Inc. Price, Consensus and EPS Surprise

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.

Zacks Rank

Principal Financial currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Finance Stocks

First-quarter earnings of Ameriprise Financial (AMP - Free Report) and Blackstone Group Inc. (BX - Free Report) beat the respective Zacks Consensus Estimate whereas SEI Investments Co. (SEIC - Free Report) missed the same.

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