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What's in Store for Principal Financial (PFG) in Q4 Earnings?

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Principal Financial Group, Inc. (PFG - Free Report) is slated to report fourth-quarter 2021 earnings on Feb 7, after market close. The company delivered an earnings surprise of 6.29% in the last reported quarter.

Factors at Play

Principal Financial fourth-quarter results are likely to reflect benefits from higher average invested assets, higher management fee revenues and strong investment performance.

Premiums at the Retirement and Income Solutions segment are likely to have been weighed down by lower sales of the single premium group and individual annuities with life contingencies.

Investment income is expected to have benefited from higher variable investment income, growth in average invested assets, favorable U.S. market performance on certain alternative investments and higher bond prepayments, and higher inflation-based investment returns on Latin America average invested assets and cash.

Growth in the Specialty Benefits insurance business, higher single premium annuity sales in Chile, higher management fee revenues and higher fees stemming from higher mean account values are likely to have benefited revenue growth in the to-be-reported quarter. The upside is likely to have been partially offset by lower sales of the single premium group and individual annuities with life contingencies.

The Zacks Consensus Estimate for fourth-quarter 2021 revenues is pegged at $3.7 billion, indicating an increase of 2.2% from the year-ago quarter reported figure.

Assets under management is likely to have benefited from higher net cash flow, strong investment performance and the migration of institutional retirement and trust retirement assets.

Expenses are likely to have decreased due to lower benefits, claims and settlement expenses and dividends to policyholders.

Operating expenses are likely to have increased due to an increase in DAC amortization, an increase in variable compensation expense, and higher variable expenses related to increased AUM.

Continued share buybacks are likely to have provided additional upside to the bottom line.

The Zacks Consensus Estimate for fourth-quarter 2021 earnings stands at $1.63 per share, indicating an increase of 10.1% from the year-ago reported figure.

What Our Quantitative Model Predicts

Our proven model does not conclusively predict an earnings beat for Principal Financial this time around. This is because a stock needs to have the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), which is not the case here.

Earnings ESP: Principal Financial has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.63. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Principal Financial currently carries a Zacks Rank #3.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Some stocks from the finance sector with the right combination of elements to surpass estimates this time around are as follows:

Franklin Resources (BEN - Free Report) has an Earnings ESP of +0.58% and a Zacks Rank of 3. The Zacks Consensus Estimate for Franklin Resources’ 2022 earnings has moved 1.6% north in the past 30 days. BEN’s expected long-term earnings growth rate is pegged at 3.6%.

The Zacks Consensus Estimate for Franklin Resources’ 2022 earnings implies a year-over-year increase of 6.7%. BEN’s earnings surpassed estimates in each of the last four quarters, the average beat being 25.58%.

Ares Management (ARES - Free Report) has an Earnings ESP of +0.23% and a Zacks Rank #3. The Zacks Consensus Estimate for Ares Management’s 2022 earnings has moved 1.9% north in the past 30 days. ARES’s expected long-term earnings growth rate is pegged at 29.7%, higher than the industry average of 16.5%.

The Zacks Consensus Estimate for Ares Management’s 2022 earnings implies a year-over-year increase of 30.7%. ARES’s earnings surpassed estimates in two of the last four quarters and missed in the other two, the average beat being 8.77%.

Hamilton Lane (HLNE - Free Report) has an Earnings ESP of +1.95% and a Zacks Rank #2. The Zacks Consensus Estimate for Hamilton Lane’s 2022 earnings has moved 3.3% north in the past 30 days.

The Zacks Consensus Estimate for Hamilton Lane’s 2022 earnings implies a year-over-year increase of 43.9%. HLNE’s earnings surpassed estimates in each of the last four quarters, the average beat being 31%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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