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Here's Why You Should Retain Principal Financial (PFG) Stock

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Principal Financial Group, Inc. (PFG - Free Report) continues to be an investor favorite on the back of its strong retention and employment growth, improved claim experience, growth in the business and effective capital deployment.

Growth Projections

The Zacks Consensus Estimate for Principal Financial’s 2023 earnings per share is pegged at $6.99, indicating a year-over-year increase of 8.1%. The expected long-term earnings growth rate is pegged at 5.5%.

Zacks Rank & Price Performance

Principal Financial currently carries a Zacks Rank #3 (Hold). The stock has rallied 27.9% against the industry’s decline of 19.6% in the past year.

Zacks Investment Research
Image Source: Zacks Investment Research

Earnings Surprise History

Principal Financial has a solid record of beating earnings estimates in each of the last seven quarters.

Business Tailwinds

Principal Financial should continue to benefit from its strength and leadership in retirement and long-term savings, group benefits and protection in the United States, retirement and long-term savings in Latin America and Asia, and global asset management.

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.

With positive net cash flow over the trailing 12 months, strong investment performance and the migration of institutional retirement and trust retirement assets, Principal Financial’s assets under management should continue to gain.

The Specialty Benefits Insurance business should continue to gain from record sales as well as strong retention and employment growth, improved claim experience, growth in the business and strong expense management.

Principal Financial boasts a strong capital position. Its excess and available capital is currently estimated to be $1.4 billion and includes around $900 million at the holding company, higher than the $800 million target, $450 million in subsidiaries and $100 million in excess of the targeted 400% risk-based capital ratio.

The company has access to a $750 million contingent capital facility. It continues to maintain a 20% to 25% leverage ratio and expects it to continue to improve.

Principal Financial expects to return $2.5-$3 billion of capital to shareholders in 2022, consisting of $2-$2.3 billion in share repurchases. The company completed a $700 million accelerated share deployable proceeds repurchase  program in June 2022. Currently, $1.2 billion remains as part of the current repurchase authorization.

Stocks to Consider

Some better-ranked stocks from the finance sector are Prospect Capital Corporation (PSEC - Free Report) , Ameriprise Financial, Inc. (AMP - Free Report) and Affiliated Managers Group, Inc. (AMG - Free Report) . While Prospect Capital sports a Zacks Rank #1 (Strong Buy), Ameriprise Financial and Affiliated Managers carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Prospect Capital’s earnings surpassed estimates in each of the last four quarters, the average surprise being 18.39%. In the past year, Prospect Capital’s stock has lost 8.8%.

The Zacks Consensus Estimate for PSEC’s 2022 and 2023 earnings per share indicates year-over-year increases of 24.7% and 2.9%, respectively.

Ameriprise Financial’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average beat being 4.83%. In the past year, Ameriprise Financial has rallied 12.2%.

The Zacks Consensus Estimate for 2022 and 2023 earnings indicates 7.9% and 18.4% year-over-year growth, respectively.

Affiliated Managers’ earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average beat being 5.20%. In the past year, Affiliated Managers has lost 6.3%.

The Zacks Consensus Estimate for AMG’s 2022 and 2023 earnings has moved 8.4% and 5.8% north in the past 30 days.

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