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Principal Financial (PFG) Provides 2023 View & Capital Plan
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Principal Financial Group, Inc. (PFG - Free Report) unveiled long-term guidance for 2023 that includes the impacts of the targeted improvements for long-duration insurance contracts accounting guidance. PFG expects to grow its operating earnings per share (EPS) at a rate of 3-6% year over year, excluding significant variances in both periods and reflecting macroeconomic assumptions as of Dec 31, 2022.
Over the long term, the investment manager targets annual EPS growth of 9% to 12%, return on equity (ROE) of 14% to 16% and 75% to 85% free capital flow conversion, including a 40% dividend payout ratio.
The Zacks Consensus Estimate for 2023 earnings is currently pegged at $6.90 per share, indicating year-over-year growth of 3.6%.
The 2023 guidance ranges exclude anticipated impacts of lower-than-expected variable investment income due to lower alternative investment returns, real estate sales and prepayment fees.
With respect to the segment outlook, 2023 revenue growth & margin guidance, excluding significant variances for net revenues at Retirement and Income Solutions (RIS) are expected to be 1% to 4% and 2% to 5% over the long term.
For Operating margin at RIS, 2023 revenue growth & margin guidance, excluding significant variances, are expected to be 35% to 39% and 36% to 40% over the long term.
Operating revenues less pass-through expenses at Principal Global Investors are expected to be down 5-1% for 2023 revenue growth & margin guidance, excluding significant variances and up 4-7% over the long term. For Operating margin at Principal Global Investors, 2023 revenue growth & margin guidance, excluding significant variances, are expected to be 34-37% and 34-38% over the long term.
Combined net revenues at Principal International are projected to be 7% to 11% for both 2023 revenue growth & margin guidance, excluding significant variances and over the long term.
For Operating margin at Principal International, 2023 revenue growth & margin guidance, excluding significant variances, are expected to be 30-34% and 34-38% over the long term.
Premium and fees at Specialty Benefits are estimated to be 8-10% for 2023 revenue growth & margin guidance, excluding significant variances and 7-10% over the long term. Premium and fees at Life Insurance are estimated to be 0-3% for 2023 revenue growth & margin guidance, excluding significant variances and 1-4% over the long term. The loss ratio at Specialty Benefits is estimated between 60% and 65% for both 2023 revenue growth & margin guidance, excluding significant variances and over the long term.
Principal Financial continues 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 plus global asset management, which help it deliver solid operating earnings. Continued growth in fee, spread and risk businesses boost the company’s long-term prospects.
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 aid Principal Financial to generate positive net cash flow for Principal Financial.
PFG expects the Corporate segment to incur about $375 to $425 million pre-tax operating losses in 2023.
Principal Financial boasts a strong capital position with sufficient cash generation capabilities and liquidity. This Zacks Rank #3 (Hold) investment manager exited 2022 with $1.5 billion of excess and available capital. This included approximately $1 billion at the holding company, $200 million above the $800 million target, $425 million in subsidiaries and $80 million in excess of the targeted 400% risk-based capital ratio estimated to be 406% at the end of 2022. This, in turn, helps it engage in capital deployment through share buybacks and dividend payments, making it an attractive pick for yield-seeking investors.
In 2021 the investment manager 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 to debt reduction and approximately $200 million toward M&A bringing 2022 capital deployments to $2.8 billion.
Principal Financial continues to target a 40% dividend payout ratio. With 15 straight years of dividend increases, PFG also boasts a solid dividend yield of 2.8%.
Focus on fee-based revenue sources, improving assets under management and its spread and risk businesses have been helping Principal Financial earn steadily, besides limiting exposure to the low-interest rate. The investment manager stated that it remains well poised to achieve its financial targets for 2023, given solid organic growth in businesses.
Shares of Principal Financial have gained 32.2% against the industry’s decrease of 1.9% in the past year.
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.
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Principal Financial (PFG) Provides 2023 View & Capital Plan
Principal Financial Group, Inc. (PFG - Free Report) unveiled long-term guidance for 2023 that includes the impacts of the targeted improvements for long-duration insurance contracts accounting guidance. PFG expects to grow its operating earnings per share (EPS) at a rate of 3-6% year over year, excluding significant variances in both periods and reflecting macroeconomic assumptions as of Dec 31, 2022.
Over the long term, the investment manager targets annual EPS growth of 9% to 12%, return on equity (ROE) of 14% to 16% and 75% to 85% free capital flow conversion, including a 40% dividend payout ratio.
The Zacks Consensus Estimate for 2023 earnings is currently pegged at $6.90 per share, indicating year-over-year growth of 3.6%.
The 2023 guidance ranges exclude anticipated impacts of lower-than-expected variable investment income due to lower alternative investment returns, real estate sales and prepayment fees.
With respect to the segment outlook, 2023 revenue growth & margin guidance, excluding significant variances for net revenues at Retirement and Income Solutions (RIS) are expected to be 1% to 4% and 2% to 5% over the long term.
For Operating margin at RIS, 2023 revenue growth & margin guidance, excluding significant variances, are expected to be 35% to 39% and 36% to 40% over the long term.
Operating revenues less pass-through expenses at Principal Global Investors are expected to be down 5-1% for 2023 revenue growth & margin guidance, excluding significant variances and up 4-7% over the long term. For Operating margin at Principal Global Investors, 2023 revenue growth & margin guidance, excluding significant variances, are expected to be 34-37% and 34-38% over the long term.
Combined net revenues at Principal International are projected to be 7% to 11% for both 2023 revenue growth & margin guidance, excluding significant variances and over the long term.
For Operating margin at Principal International, 2023 revenue growth & margin guidance, excluding significant variances, are expected to be 30-34% and 34-38% over the long term.
Premium and fees at Specialty Benefits are estimated to be 8-10% for 2023 revenue growth & margin guidance, excluding significant variances and 7-10% over the long term. Premium and fees at Life Insurance are estimated to be 0-3% for 2023 revenue growth & margin guidance, excluding significant variances and 1-4% over the long term. The loss ratio at Specialty Benefits is estimated between 60% and 65% for both 2023 revenue growth & margin guidance, excluding significant variances and over the long term.
Principal Financial continues 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 plus global asset management, which help it deliver solid operating earnings. Continued growth in fee, spread and risk businesses boost the company’s long-term prospects.
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 aid Principal Financial to generate positive net cash flow for Principal Financial.
PFG expects the Corporate segment to incur about $375 to $425 million pre-tax operating losses in 2023.
Principal Financial boasts a strong capital position with sufficient cash generation capabilities and liquidity. This Zacks Rank #3 (Hold) investment manager exited 2022 with $1.5 billion of excess and available capital. This included approximately $1 billion at the holding company, $200 million above the $800 million target, $425 million in subsidiaries and $80 million in excess of the targeted 400% risk-based capital ratio estimated to be 406% at the end of 2022. This, in turn, helps it engage in capital deployment through share buybacks and dividend payments, making it an attractive pick for yield-seeking investors.
In 2021 the investment manager 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 to debt reduction and approximately $200 million toward M&A bringing 2022 capital deployments to $2.8 billion.
Principal Financial continues to target a 40% dividend payout ratio. With 15 straight years of dividend increases, PFG also boasts a solid dividend yield of 2.8%.
Focus on fee-based revenue sources, improving assets under management and its spread and risk businesses have been helping Principal Financial earn steadily, besides limiting exposure to the low-interest rate. The investment manager stated that it remains well poised to achieve its financial targets for 2023, given solid organic growth in businesses.
Shares of Principal Financial have gained 32.2% against the industry’s decrease of 1.9% in the past year.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the finance sector are Ameriprise Financial, Inc. (AMP - Free Report) , BlackRock, Inc. (BLK - Free Report) and AssetMark Financial Holdings, Inc. (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.