Principal Financial Group, Inc. ( PFG Quick Quote PFG - Free Report) have gained 29.2% in a year against the industry's decline of 3.5%. The Zacks S&P 500 composite has decreased 10.8% in the said time frame. With a market capitalization of $21.8 billion, the average volume of shares traded in the last three months was 1.5 million. Image Source: Zacks Investment Research
The rally was largely driven by strong retention and employment growth, improved claim experience, growth in the business and effective capital deployment.
This Zacks Rank #3 (Hold) insurer has a solid track record of beating earnings estimates in each of the last four quarters, the average being 13.76%. Will the Bull Run Continue?
The Zacks Consensus Estimate for Principal Financial’s 2023 earnings is pegged at $6.90, indicating a 3.6% increase from the year-ago reported figure on 0.5% higher revenues of $13.54 billion. The consensus estimate for 2024 earnings is pegged at $7.58, indicating a 9.8% increase from the year-ago reported figure on 3.9% higher revenues of $14.07 billion.
PFG’s revenue growth is expected to improve in the long run, riding on higher premiums and other considerations, fees and other revenues and higher net investment income across its segments. 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. The Specialty Benefits Insurance business should continue to gain from record sales, strong retention and employment growth. Growth in the business, favorable claims and disciplined expense management should benefit its pre-tax operating earnings. Strong institutional flows across equities, real estate and specialty fixed income highlighting the value of diversified distribution through its institutional, retail and retirement channels are likely to drive positive net cash flow. Principal Financial’s extensive distribution footprint, strategic buyouts and operational discipline should enhance the assets under management growth. The company boasts a strong capital position with sufficient cash generation capabilities and liquidity. By the end of 2022, its excess and available capital are estimated to be $1.5 billion. Leverage ratio was within the 20% to 25% targeted range. The statutory RBC ratio for Principal Life Insurance Company is estimated to be 406%, above the midpoint of the targeted RBC ratio range of 400%. Principal Financial’s capital deployment through share buybacks and dividend payment looks impressive. It also boasts a solid dividend yield of 2.8%. It returned $2.3 billion to shareholders in 2022, including nearly $1.7 billion of share repurchases and more than $640 million of dividends. It also deployed $300 million for debt reduction and approximately $200 million toward M&A bringing 2022 capital deployments to $2.8 billion. Stocks to Consider
Some better-ranked stocks from the finance sector are
Ameriprise Financial, Inc. ( AMP Quick Quote AMP - Free Report) , BlackRock, Inc. ( BLK Quick Quote BLK - Free Report) and AssetMark Financial Holdings, Inc. ( AMK Quick Quote AMK - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Ameriprise Financial’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average beat being 5.50%. In the past year, Ameriprise Financial has rallied 18.3%. The Zacks Consensus Estimate for AMP’s 2023 and 2024 earnings indicates 22.1% and 8.1% year-over-year growth, respectively. BlackRock’s earnings surpassed the Zacks Consensus Estimate in three of the last four quarters and missed in one, the average beat being 8.81%. In the past year, BLK has lost 6.5%. The Zacks Consensus Estimate for BLK’s 2024 earnings indicates 13.3% year-over-year growth. AssetMark Financial’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average beat being 7.95%. In the past year, AssetMark Financial has rallied 34.8%. The Zacks Consensus Estimate for AMK’s 2023 and 2024 earnings indicates 24.2% and 6.2% year-over-year growth, respectively.