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Why Is Principal Financial (PFG) Down 3.2% Since Last Earnings Report?
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It has been about a month since the last earnings report for Principal Financial (PFG - Free Report) . Shares have lost about 3.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Principal Financial due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Principal Financial Q4 Earnings Beat, Decrease Y/Y
Principal Financial Group, Inc.’s fourth-quarter 2022 operating net income of $1.70 per share beat the Zacks Consensus Estimate by 11.8% as well as our estimate of $1.10 per share. However, it decreased 8.1% year over year. Principal Financial witnessed soft performance across most of the segments and lower assets under management which were offset by lower expenses.
Full-Year Highlights
For 2022, Principal Financial reported an operating net income of $6.66 per share, which beat the Zacks Consensus Estimate by 2.6%. Moreover, it decreased 1.6% year over year. Total operating revenues of $13.47 billion beat the consensus mark by 2.1%. However, it decreased 6.8% year over year.
Behind the Headlines
Operating revenues decreased 12% year over year to nearly $3.6 billion. The decrease was due to lower fees and other revenues and net investment income. The top line beat the Zacks Consensus Estimate by 8.6%. The figure was higher than our estimate of $2.8 billion.
Total expenses decreased 10.5% year over year to $3.1 billion due to lower operating expenses and benefits, claims and settlement expenses. The figure was higher than our estimate of $2.9 billion.
Principal Financial’s asset under management (AUM) as of Dec 31, 2022 was $635.3 billion, down 11% year over year.
Segment Update
Retirement and Income Solution: Revenues decreased 9.6% year over year to about $1.8 billion. Pre-tax operating earnings decreased 27.8% to $238 million on account of soft performance at Retirement and Income Solution- Spread business. The figure was higher than our estimate of $236.8 million.
Principal Global Investors: Revenues of $410.6 million were down 16.9% from the prior-year quarter. Operating earnings decreased 28.1% year over year to $138.6 million, primarily due to lower operating revenues less pass-through expenses.
Principal International: Revenues decreased 15.7% year over year to $345 million in the quarter. Pre-tax operating earnings decreased 12.8% to $91.7 million due to lower combined net revenues. The figure was lower than our estimate of $144.4 million.
U.S. Insurance Solution: Revenues decreased 12.1% year over year to $1 billion. Pre-Tax operating earnings of $128.5 million increased 32% year over year driven by improved performance at the Specialty Benefits Insurance business. The figure was higher than our estimate of $68 million.
Corporate: Operating loss of $86.7 million was narrower than the $94.4 million loss incurred a year ago, owing to higher-than-expected variable investment income.
Financial Update
As of Dec 31, 2022, cash and cash equivalents were $4.8 billion, doubled year over year. At the fourth-quarter end, debt was $4 billion, down 6.6%. As of Dec 31, 2022, book value per share (excluding AOCI other than foreign currency translation adjustment) was $52.27, up 6.1% year over year.
Capital Deployment
Principal Financial paid out $156.2 million in dividends and bought back shares worth $250.3 million in the fourth quarter. The board of directors approved a first-quarter dividend of 64 cents per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Principal Financial has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Principal Financial has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Principal Financial belongs to the Zacks Financial - Investment Management industry. Another stock from the same industry, Federated Hermes (FHI - Free Report) , has gained 0.1% over the past month. More than a month has passed since the company reported results for the quarter ended December 2022.
Federated Hermes reported revenues of $373.9 million in the last reported quarter, representing a year-over-year change of +16.2%. EPS of $0.90 for the same period compares with $0.71 a year ago.
Federated Hermes is expected to post earnings of $0.73 per share for the current quarter, representing a year-over-year change of +19.7%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.5%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Federated Hermes. Also, the stock has a VGM Score of B.
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Why Is Principal Financial (PFG) Down 3.2% Since Last Earnings Report?
It has been about a month since the last earnings report for Principal Financial (PFG - Free Report) . Shares have lost about 3.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Principal Financial due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Principal Financial Q4 Earnings Beat, Decrease Y/Y
Principal Financial Group, Inc.’s fourth-quarter 2022 operating net income of $1.70 per share beat the Zacks Consensus Estimate by 11.8% as well as our estimate of $1.10 per share. However, it decreased 8.1% year over year. Principal Financial witnessed soft performance across most of the segments and lower assets under management which were offset by lower expenses.
Full-Year Highlights
For 2022, Principal Financial reported an operating net income of $6.66 per share, which beat the Zacks Consensus Estimate by 2.6%. Moreover, it decreased 1.6% year over year. Total operating revenues of $13.47 billion beat the consensus mark by 2.1%. However, it decreased 6.8% year over year.
Behind the Headlines
Operating revenues decreased 12% year over year to nearly $3.6 billion. The decrease was due to lower fees and other revenues and net investment income. The top line beat the Zacks Consensus Estimate by 8.6%. The figure was higher than our estimate of $2.8 billion.
Total expenses decreased 10.5% year over year to $3.1 billion due to lower operating expenses and benefits, claims and settlement expenses. The figure was higher than our estimate of $2.9 billion.
Principal Financial’s asset under management (AUM) as of Dec 31, 2022 was $635.3 billion, down 11% year over year.
Segment Update
Retirement and Income Solution: Revenues decreased 9.6% year over year to about $1.8 billion. Pre-tax operating earnings decreased 27.8% to $238 million on account of soft performance at Retirement and Income Solution- Spread business. The figure was higher than our estimate of $236.8 million.
Principal Global Investors: Revenues of $410.6 million were down 16.9% from the prior-year quarter. Operating earnings decreased 28.1% year over year to $138.6 million, primarily due to lower operating revenues less pass-through expenses.
Principal International: Revenues decreased 15.7% year over year to $345 million in the quarter. Pre-tax operating earnings decreased 12.8% to $91.7 million due to lower combined net revenues. The figure was lower than our estimate of $144.4 million.
U.S. Insurance Solution: Revenues decreased 12.1% year over year to $1 billion. Pre-Tax operating earnings of $128.5 million increased 32% year over year driven by improved performance at the Specialty Benefits Insurance business. The figure was higher than our estimate of $68 million.
Corporate: Operating loss of $86.7 million was narrower than the $94.4 million loss incurred a year ago, owing to higher-than-expected variable investment income.
Financial Update
As of Dec 31, 2022, cash and cash equivalents were $4.8 billion, doubled year over year. At the fourth-quarter end, debt was $4 billion, down 6.6%. As of Dec 31, 2022, book value per share (excluding AOCI other than foreign currency translation adjustment) was $52.27, up 6.1% year over year.
Capital Deployment
Principal Financial paid out $156.2 million in dividends and bought back shares worth $250.3 million in the fourth quarter. The board of directors approved a first-quarter dividend of 64 cents per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Principal Financial has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Principal Financial has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Principal Financial belongs to the Zacks Financial - Investment Management industry. Another stock from the same industry, Federated Hermes (FHI - Free Report) , has gained 0.1% over the past month. More than a month has passed since the company reported results for the quarter ended December 2022.
Federated Hermes reported revenues of $373.9 million in the last reported quarter, representing a year-over-year change of +16.2%. EPS of $0.90 for the same period compares with $0.71 a year ago.
Federated Hermes is expected to post earnings of $0.73 per share for the current quarter, representing a year-over-year change of +19.7%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.5%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Federated Hermes. Also, the stock has a VGM Score of B.