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Principal Financial (PFG) Q1 Earnings Miss, Revenues Up Y/Y
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Principal Financial Group, Inc.’s (PFG - Free Report) first-quarter 2023 operating net income of $1.48 per share missed the Zacks Consensus Estimate by 3.8%. The figure was higher than our estimate of 96 cents per share. Also, the bottom line decreased 1.9% year over year.
Principal Financial witnessed soft performance across most of the segments, higher expenses and lower assets under management (AUM), offset by higher revenues in Retirement and Income Solution business.
Principal Financial Group, Inc. Price, Consensus and EPS Surprise
Operating revenues increased 6.1% year over year to $3.4 billion due to increased premiums and other considerations.
Total expenses increased 11.5% year over year to $3 billion due to higher benefits, claims and settlement expenses and operating expenses. The figure was higher than our estimate of $2.6 billion.
Principal Financial’s AUM as of Mar 31, 2023, amounted to $660 billion, down 7.6% year over year.
Segment Update
Retirement and Income Solution: Revenues increased 27.9% year over year to about $1.6 billion because of higher premiums and other considerations. The figure was higher than our estimate of $1.1 billion.
Pre-tax operating earnings decreased 15% year over year to $249.8 million due to lower net revenues, partially offset by lower operating expenses. The figure was higher than our estimate of $195.1 million.
Principal Global Investors: Revenues of $392.7 million were down 9.7% from the prior-year quarter due to lower fees and other revenues. The figure was lower than our estimate of $460.6 million.
Pre-tax operating earnings decreased 24% year over year to $109.1 million due to lower operating revenues less pass-through expenses. The figure was lower than our estimate of $155 million.
Principal International: Revenues decreased 6.7% year over year to $305.1 million in the quarter due to lower premiums and other considerations and net investment income. The figure was lower than our estimate of $320.1 million.
Pre-tax operating earnings increased 16% year over year to $78.7 million driven by higher combined net revenues. The figure was higher than our estimate of $55.3 million.
Benefits and Protection: Revenues decreased 11.2% year over year to $1.1 billion owing to lower net investment income, fees and other revenues.
Pre-Tax operating earnings of $99.3 million increased 7% year over year, mainly due to growth in the business and a decrease in the incurred loss ratio at the Specialty Benefits Insurance business.
Corporate: Operating loss of $96.1 million was narrower than $129 million loss incurred a year ago. This decrease was due to higher net investment income. The figure was narrower than our estimate of a loss of $102.4 million.
Financial Update
As of Mar 31, 2023, cash and cash equivalents were $4.6 billion, up 69.3% year over year.
At first-quarter end, debt was $4.7 billion, up 9.5% year over year. As of Mar 31, 2023, book value per share (excluding AOCI other than foreign currency translation adjustment) was $51.78, up 7.9% year over year.
Dividend and Share Repurchase Update
Principal Financial paid out $155.5 million in dividends and deployed $150.5 million to buy back 1.7 million shares in the quarter under review.
The board of directors approved second-quarter dividend of 64 cents per share. The dividend will be paid out on Jun 30, 2023, to shareholders of record as of Jun 2, 2023.
BlackRock, Inc.’s (BLK - Free Report) first-quarter 2023 adjusted earnings of $7.93 per share surpassed the Zacks Consensus Estimate of $7.71. However, the figure reflects a decrease of 16.7% from the year-ago quarter. Our estimate for adjusted earnings was $7.37. Results have benefited from a decline in expenses. However, lower revenues and AUM balance were major headwinds.
Net income attributable to BlackRock (on a GAAP basis) was $1.16 billion, down 19.4% from the prior-year quarter. We had projected the metric to be $1.07 billion. Revenues (on a GAAP basis) were $4.24 billion, marginally beating the Zacks Consensus Estimate of $4.23 billion. However, the top line declined 9.7% year over year. Our estimate for GAAP revenues was $4.17 billion.
Total expenses amounted to $2.81 billion, down 4.4% from the prior-year quarter. Our estimate for expenses was $2.79 billion. Non-operating income (on a GAAP basis) was $116 million against non-operating expenses of $138 million in the year-ago quarter. BlackRock’s adjusted operating income was $1.51 billion, down 17.1% from the prior-year period.
Ameriprise Financial, Inc.’s (AMP - Free Report) first-quarter 2023 adjusted operating earnings of $7.25 per share handily surpassed the Zacks Consensus Estimate of $7.13. The bottom line reflects a rise of 25% from the year-ago quarter. We had projected the same to be $6.60. After considering significant items, net income (GAAP basis) was $417 million or $3.79 per share, down substantially from $825 million or $7.10 per share in the prior-year quarter.
On an operating basis, adjusted total net revenues were $3.7 billion, up 3% year over year. The top line missed the Zacks Consensus Estimate of $3.72 billion. Our estimate for the metric was $3.52 billion. On a GAAP basis, net revenues were $3.74 billion, growing 3%.
Adjusted operating expenses totaled $2.72 billion, which declined 2%. We had projected the same to be $2.60 billion. Total AUM and assets under administration decreased 8% year over year to $1.24 trillion.
Invesco Ltd.’s (IVZ - Free Report) first-quarter 2023 adjusted earnings of 38 cents per share surpassed the Zacks Consensus Estimate of 36 cents. The bottom line, however, plunged 32.1% from the prior-year quarter. Our estimate for earnings was 31 cents.
On a GAAP basis, net income attributable to common shareholders was $145 million or 32 cents per share, down from $197.7 million or 43 cents per share a year ago. Adjusted quarterly net revenues were $1.08 billion, falling 14.1% year over year. The top line matched the Zacks Consensus Estimate. Our estimate for net revenues was $1.03 billion. Adjusted operating expenses were $749 million, down 1.2%. We expected the metric to be $749.1 million. The adjusted operating margin was 30.4%, down from 39.5% a year ago.
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Principal Financial (PFG) Q1 Earnings Miss, Revenues Up Y/Y
Principal Financial Group, Inc.’s (PFG - Free Report) first-quarter 2023 operating net income of $1.48 per share missed the Zacks Consensus Estimate by 3.8%. The figure was higher than our estimate of 96 cents per share. Also, the bottom line decreased 1.9% year over year.
Principal Financial witnessed soft performance across most of the segments, higher expenses and lower assets under management (AUM), offset by higher revenues in Retirement and Income Solution business.
Principal Financial Group, Inc. Price, Consensus and EPS Surprise
Principal Financial Group, Inc. price-consensus-eps-surprise-chart | Principal Financial Group, Inc. Quote
Behind the Headlines
Operating revenues increased 6.1% year over year to $3.4 billion due to increased premiums and other considerations.
Total expenses increased 11.5% year over year to $3 billion due to higher benefits, claims and settlement expenses and operating expenses. The figure was higher than our estimate of $2.6 billion.
Principal Financial’s AUM as of Mar 31, 2023, amounted to $660 billion, down 7.6% year over year.
Segment Update
Retirement and Income Solution: Revenues increased 27.9% year over year to about $1.6 billion because of higher premiums and other considerations. The figure was higher than our estimate of $1.1 billion.
Pre-tax operating earnings decreased 15% year over year to $249.8 million due to lower net revenues, partially offset by lower operating expenses. The figure was higher than our estimate of $195.1 million.
Principal Global Investors: Revenues of $392.7 million were down 9.7% from the prior-year quarter due to lower fees and other revenues. The figure was lower than our estimate of $460.6 million.
Pre-tax operating earnings decreased 24% year over year to $109.1 million due to lower operating revenues less pass-through expenses. The figure was lower than our estimate of $155 million.
Principal International: Revenues decreased 6.7% year over year to $305.1 million in the quarter due to lower premiums and other considerations and net investment income. The figure was lower than our estimate of $320.1 million.
Pre-tax operating earnings increased 16% year over year to $78.7 million driven by higher combined net revenues. The figure was higher than our estimate of $55.3 million.
Benefits and Protection: Revenues decreased 11.2% year over year to $1.1 billion owing to lower net investment income, fees and other revenues.
Pre-Tax operating earnings of $99.3 million increased 7% year over year, mainly due to growth in the business and a decrease in the incurred loss ratio at the Specialty Benefits Insurance business.
Corporate: Operating loss of $96.1 million was narrower than $129 million loss incurred a year ago. This decrease was due to higher net investment income. The figure was narrower than our estimate of a loss of $102.4 million.
Financial Update
As of Mar 31, 2023, cash and cash equivalents were $4.6 billion, up 69.3% year over year.
At first-quarter end, debt was $4.7 billion, up 9.5% year over year. As of Mar 31, 2023, book value per share (excluding AOCI other than foreign currency translation adjustment) was $51.78, up 7.9% year over year.
Dividend and Share Repurchase Update
Principal Financial paid out $155.5 million in dividends and deployed $150.5 million to buy back 1.7 million shares in the quarter under review.
The board of directors approved second-quarter dividend of 64 cents per share. The dividend will be paid out on Jun 30, 2023, to shareholders of record as of Jun 2, 2023.
Zacks Rank
Principal Financial currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Finance Stocks
BlackRock, Inc.’s (BLK - Free Report) first-quarter 2023 adjusted earnings of $7.93 per share surpassed the Zacks Consensus Estimate of $7.71. However, the figure reflects a decrease of 16.7% from the year-ago quarter. Our estimate for adjusted earnings was $7.37. Results have benefited from a decline in expenses. However, lower revenues and AUM balance were major headwinds.
Net income attributable to BlackRock (on a GAAP basis) was $1.16 billion, down 19.4% from the prior-year quarter. We had projected the metric to be $1.07 billion. Revenues (on a GAAP basis) were $4.24 billion, marginally beating the Zacks Consensus Estimate of $4.23 billion. However, the top line declined 9.7% year over year. Our estimate for GAAP revenues was $4.17 billion.
Total expenses amounted to $2.81 billion, down 4.4% from the prior-year quarter. Our estimate for expenses was $2.79 billion. Non-operating income (on a GAAP basis) was $116 million against non-operating expenses of $138 million in the year-ago quarter. BlackRock’s adjusted operating income was $1.51 billion, down 17.1% from the prior-year period.
Ameriprise Financial, Inc.’s (AMP - Free Report) first-quarter 2023 adjusted operating earnings of $7.25 per share handily surpassed the Zacks Consensus Estimate of $7.13. The bottom line reflects a rise of 25% from the year-ago quarter. We had projected the same to be $6.60. After considering significant items, net income (GAAP basis) was $417 million or $3.79 per share, down substantially from $825 million or $7.10 per share in the prior-year quarter.
On an operating basis, adjusted total net revenues were $3.7 billion, up 3% year over year. The top line missed the Zacks Consensus Estimate of $3.72 billion. Our estimate for the metric was $3.52 billion. On a GAAP basis, net revenues were $3.74 billion, growing 3%.
Adjusted operating expenses totaled $2.72 billion, which declined 2%. We had projected the same to be $2.60 billion. Total AUM and assets under administration decreased 8% year over year to $1.24 trillion.
Invesco Ltd.’s (IVZ - Free Report) first-quarter 2023 adjusted earnings of 38 cents per share surpassed the Zacks Consensus Estimate of 36 cents. The bottom line, however, plunged 32.1% from the prior-year quarter. Our estimate for earnings was 31 cents.
On a GAAP basis, net income attributable to common shareholders was $145 million or 32 cents per share, down from $197.7 million or 43 cents per share a year ago. Adjusted quarterly net revenues were $1.08 billion, falling 14.1% year over year. The top line matched the Zacks Consensus Estimate. Our estimate for net revenues was $1.03 billion. Adjusted operating expenses were $749 million, down 1.2%. We expected the metric to be $749.1 million. The adjusted operating margin was 30.4%, down from 39.5% a year ago.