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Principal Financial (PFG) Q4 Earnings Top, Revenues Rise Y/Y
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Principal Financial Group, Inc.’s (PFG - Free Report) fourth-quarter 2023 operating net income of $1.83 per share beat the Zacks Consensus Estimate by 7.6%. Also, the bottom line increased 15.8% year over year.
Operating revenues jumped 18.3% year over year to $4.2 billion due to increased fees and other revenues, premiums and other considerations, as well as net investment income. The metric beat the Zacks Consensus Estimate by 20.1%.
Principal Financial witnessed higher premiums, fees and other revenues and net investment income across most of the segments, offset by higher expenses and soft performance in the Corporate segment.
Principal Financial Group, Inc. Price, Consensus and EPS Surprise
Total expenses increased 20.4% year over year to $3.8 billion due to higher benefits, claims and settlement and operating expenses. The figure was higher than our estimate of $3 billion.
As of Dec 31, 2023, Principal Financial’s assets under management (AUM) amounted to $695 billion, which is included in assets under administration (AUA) of $1.6 trillion.
Segment Update
Retirement and Income Solution: Revenues increased 31.6% year over year to $2.3 billion because of higher premiums and other considerations, fees and other revenues and net investment income. The figure beat our estimate of $1.7 billion.
Pre-tax operating earnings increased 30% year over year to $264.6 million, primarily due to higher net revenues. The figure beat our estimate of $241.6 million.
Principal Global Investors: Revenues of $403.8 million were down 1.6% from the prior-year quarter due to lower fees and other revenues. The figure beat our estimate of $355 million.
Pre-tax operating earnings decreased 8% year over year to $127.3 million, primarily due to lower operating revenues less pass-through expenses and higher one-time expenses. The metric missed our estimate of $128 million. Principal International: Revenues inched up 0.3% year over year to $335.8 million in the quarter due to higher premiums and other considerations, as well as fees and other revenues. The figure beat our estimate of $297.4 million.
Pre-tax operating earnings increased 18% year over year to $92 million, driven by higher combined net revenues and improved margin. The figure beat our estimate of $55.2 million.
Benefits and Protection: Revenues increased 9.4% year over year to $1.2 billion owing to higher premiums and other considerations, net investment income, fees and other revenues. The figure beat our estimate of $1.1 billion.
Pre-tax operating earnings of $144.4 million rose 4.5% year over year. The metric beat our estimate of $135.5 million.
Specialty Benefits: Revenues increased 9.4% year over year to $838.4 million owing to higher premiums and other considerations, fees and other revenues, as well as net investment income. The metric beat our estimate of $797.3 million.
Pre-tax operating earnings of $119.3 million increased 6% year over year. The rise was due to growth in the business and expense management discipline, partially offset by a higher incurred loss ratio. The metric beat our estimate of $117.5 million.
Life Insurance: Revenues increased 9.8% year over year to $334.1 million owing to higher fees and other revenues and net investment income. The metric missed our estimate of $344.2 million.
Pre-tax operating earnings of $25.1 million decreased 1% year over year. The metric beat our estimate of $18 million.
Corporate: Pre-tax operating losses of $88.5 million were wider than a loss of $86.7 million incurred a year ago. Our estimate was pegged at earnings of $2.1 million.
Financial Update
As of Dec 31, 2023, cash and cash equivalents were $4.7 billion, which decreased 2.9% from 2022-end.
At the fourth-quarter end, long-term debt was $3.9 billion, down 1.6% from 2022-end. As of Dec 31, 2023, book value per share (excluding cumulative change in fair value of funds withheld embedded derivative and AOCI other than foreign currency translation adjustment) was $53.87, up 5.8% from 2022-end.
Dividend and Share Repurchase Update
Principal Financial paid out $159 million in dividends and deployed $250.6 million to buy back 3.5 million shares in the fourth quarter.
The board of directors raised the first-quarter dividend by 4% to 69 cents per share, bringing the trailing 12-month dividend to $2.65 per share. The dividend will be payable on Mar 28, 2024, to shareholders of record as of Mar 12.
The board approved a new authorization for the repurchase of $1.5 billion of the company’s outstanding shares. As of Dec 31, 2023, approximately $0.3 billion remained under the company’s prior authorization.
Full-Year Highlights
For 2023, Principal Financial reported an operating net income of $6.55 per share, which beat the Zacks Consensus Estimate by 1.8%. Moreover, it increased 3.3% year over year.
Total operating revenues of $14.66 billion beat the consensus mark by 5%. Moreover, it increased 9.4% year over year.
2024 Guidance
Principal Financial expects to deliver non-GAAP EPS growth of 9-12%, reflecting macroeconomic assumptions as of Dec 31, 2023.
Long-Term Enterprise Financial Targets Remain Unchanged: PFG expects 9-12% annual non-GAAP EPS growth. It anticipates 75-85% free capital flow conversion, including 40% dividend payout ratio. The insurer projects a non-GAAP return on equity in the range of 14-16%.
SEI Investments Company’s (SEIC - Free Report) fourth-quarter 2023 earnings of 91 cents per share met the Zacks Consensus Estimate. The bottom line reflects a rise of 10% from the prior-year quarter. Results benefited from higher revenues and an increase in the AUM balance. Higher expenses acted as a headwind. Net income was $120.7 million, up 8% from the year-ago quarter. Our estimate for the metric was $113.7 million.
Earnings per share of $3.46 for 2023 were in line with the consensus estimate and stable year over year. Net income declined 3% to $462.3 million. Total revenues for the reported quarter were $484.9 million, up 6% year over year. Also, the top line beat the Zacks Consensus Estimate of $481.2 million.
Total revenues for 2023 fell 4% to $1.92 billion. The top line matched the consensus estimate. Total expenses were $345.5 million, rising 4%. Our estimate for expenses was $367.5 million. Operating income increased 8% to $101.7 million. Our estimate for the metric was $103.5 million.
T. Rowe Price Group, Inc. (TROW - Free Report) has reported fourth-quarter 2023 adjusted earnings per share of $1.72, which outpaced the Zacks Consensus Estimate of $1.60. However, the bottom line decreased 1.1% year over year. TROW's net revenues were supported by a rise in AUM. A decline in expenses aided bottom-line growth. Net income attributable to T. Rowe Price was $437.6 million, up 64.5% year over year.
In 2023, adjusted earnings of $7.59 per share beat the consensus estimate of $7.47 but declined 5.4% year over year. Net income attributable to T. Rowe Price was $1.79 billion, jumping 14.8%. Net revenues in the fourth quarter increased 7.7% year over year to $1.64 billion.
The top line surpassed the Zacks Consensus Estimate of $1.62 billion. In 2023, net revenues were $6.46 billion, down marginally year over year. The top line met the consensus estimate. Capital allocation-based income jumped 51.7% to $40.2 million. We projected investment advisory fees and capital allocation-based income of $1.40 billion and $36 million, respectively.
Ameriprise Financial, Inc.’s (AMP - Free Report) fourth-quarter 2023 adjusted operating earnings (excluding regulatory accrual, severance and mark-to-market impacts on share-based compensation expenses) of $7.75 per share handily surpassed the Zacks Consensus Estimate of $7.67. The bottom line reflects a rise of 14% from the year-ago quarter. Results were aided by revenue growth, along with higher AUM and AUA balances. However, an increase in expenses was negative. Probably due to this, shares of the company lost 5% in the after-market trading following the earnings release.
After considering significant items, net income (GAAP basis) was $377 million or $3.57 per share, down from $649 million or $5.83 per share in the prior-year quarter. Our estimate for the metric was $675.2 million.
For 2023, adjusted operating earnings (excluding unlocking and regulatory accrual, severance, and mark-to-market impacts on share-based compensation expenses) of $30.46 per share handily surpassed the Zacks Consensus Estimate of $29.36. The bottom line suggests a rise of 24% from the previous year. Net income (GAAP basis) was $2.56 billion, down from $3.15 billion in the previous year. Our estimate for the metric was $2.85 billion.
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Principal Financial (PFG) Q4 Earnings Top, Revenues Rise Y/Y
Principal Financial Group, Inc.’s (PFG - Free Report) fourth-quarter 2023 operating net income of $1.83 per share beat the Zacks Consensus Estimate by 7.6%. Also, the bottom line increased 15.8% year over year.
Operating revenues jumped 18.3% year over year to $4.2 billion due to increased fees and other revenues, premiums and other considerations, as well as net investment income. The metric beat the Zacks Consensus Estimate by 20.1%.
Principal Financial witnessed higher premiums, fees and other revenues and net investment income across most of the segments, offset by higher expenses and soft performance in the Corporate segment.
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
Total expenses increased 20.4% year over year to $3.8 billion due to higher benefits, claims and settlement and operating expenses. The figure was higher than our estimate of $3 billion.
As of Dec 31, 2023, Principal Financial’s assets under management (AUM) amounted to $695 billion, which is included in assets under administration (AUA) of $1.6 trillion.
Segment Update
Retirement and Income Solution: Revenues increased 31.6% year over year to $2.3 billion because of higher premiums and other considerations, fees and other revenues and net investment income. The figure beat our estimate of $1.7 billion.
Pre-tax operating earnings increased 30% year over year to $264.6 million, primarily due to higher net revenues. The figure beat our estimate of $241.6 million.
Principal Global Investors: Revenues of $403.8 million were down 1.6% from the prior-year quarter due to lower fees and other revenues. The figure beat our estimate of $355 million.
Pre-tax operating earnings decreased 8% year over year to $127.3 million, primarily due to lower operating revenues less pass-through expenses and higher one-time expenses. The metric missed our estimate of $128 million.
Principal International: Revenues inched up 0.3% year over year to $335.8 million in the quarter due to higher premiums and other considerations, as well as fees and other revenues. The figure beat our estimate of $297.4 million.
Pre-tax operating earnings increased 18% year over year to $92 million, driven by higher combined net revenues and improved margin. The figure beat our estimate of $55.2 million.
Benefits and Protection: Revenues increased 9.4% year over year to $1.2 billion owing to higher premiums and other considerations, net investment income, fees and other revenues. The figure beat our estimate of $1.1 billion.
Pre-tax operating earnings of $144.4 million rose 4.5% year over year. The metric beat our estimate of $135.5 million.
Specialty Benefits: Revenues increased 9.4% year over year to $838.4 million owing to higher premiums and other considerations, fees and other revenues, as well as net investment income. The metric beat our estimate of $797.3 million.
Pre-tax operating earnings of $119.3 million increased 6% year over year. The rise was due to growth in the business and expense management discipline, partially offset by a higher incurred loss ratio. The metric beat our estimate of $117.5 million.
Life Insurance: Revenues increased 9.8% year over year to $334.1 million owing to higher fees and other revenues and net investment income. The metric missed our estimate of $344.2 million.
Pre-tax operating earnings of $25.1 million decreased 1% year over year. The metric beat our estimate of $18 million.
Corporate: Pre-tax operating losses of $88.5 million were wider than a loss of $86.7 million incurred a year ago. Our estimate was pegged at earnings of $2.1 million.
Financial Update
As of Dec 31, 2023, cash and cash equivalents were $4.7 billion, which decreased 2.9% from 2022-end.
At the fourth-quarter end, long-term debt was $3.9 billion, down 1.6% from 2022-end. As of Dec 31, 2023, book value per share (excluding cumulative change in fair value of funds withheld embedded derivative and AOCI other than foreign currency translation adjustment) was $53.87, up 5.8% from 2022-end.
Dividend and Share Repurchase Update
Principal Financial paid out $159 million in dividends and deployed $250.6 million to buy back 3.5 million shares in the fourth quarter.
The board of directors raised the first-quarter dividend by 4% to 69 cents per share, bringing the trailing 12-month dividend to $2.65 per share. The dividend will be payable on Mar 28, 2024, to shareholders of record as of Mar 12.
The board approved a new authorization for the repurchase of $1.5 billion of the company’s outstanding shares. As of Dec 31, 2023, approximately $0.3 billion remained under the company’s prior authorization.
Full-Year Highlights
For 2023, Principal Financial reported an operating net income of $6.55 per share, which beat the Zacks Consensus Estimate by 1.8%. Moreover, it increased 3.3% year over year.
Total operating revenues of $14.66 billion beat the consensus mark by 5%. Moreover, it increased 9.4% year over year.
2024 Guidance
Principal Financial expects to deliver non-GAAP EPS growth of 9-12%, reflecting macroeconomic assumptions as of Dec 31, 2023.
Long-Term Enterprise Financial Targets Remain Unchanged: PFG expects 9-12% annual non-GAAP EPS growth. It anticipates 75-85% free capital flow conversion, including 40% dividend payout ratio. The insurer projects a non-GAAP return on equity in the range of 14-16%.
Zacks Rank
Principal Financial currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Finance Sector Releases
SEI Investments Company’s (SEIC - Free Report) fourth-quarter 2023 earnings of 91 cents per share met the Zacks Consensus Estimate. The bottom line reflects a rise of 10% from the prior-year quarter. Results benefited from higher revenues and an increase in the AUM balance. Higher expenses acted as a headwind. Net income was $120.7 million, up 8% from the year-ago quarter. Our estimate for the metric was $113.7 million.
Earnings per share of $3.46 for 2023 were in line with the consensus estimate and stable year over year. Net income declined 3% to $462.3 million. Total revenues for the reported quarter were $484.9 million, up 6% year over year. Also, the top line beat the Zacks Consensus Estimate of $481.2 million.
Total revenues for 2023 fell 4% to $1.92 billion. The top line matched the consensus estimate. Total expenses were $345.5 million, rising 4%. Our estimate for expenses was $367.5 million. Operating income increased 8% to $101.7 million. Our estimate for the metric was $103.5 million.
T. Rowe Price Group, Inc. (TROW - Free Report) has reported fourth-quarter 2023 adjusted earnings per share of $1.72, which outpaced the Zacks Consensus Estimate of $1.60. However, the bottom line decreased 1.1% year over year. TROW's net revenues were supported by a rise in AUM. A decline in expenses aided bottom-line growth. Net income attributable to T. Rowe Price was $437.6 million, up 64.5% year over year.
In 2023, adjusted earnings of $7.59 per share beat the consensus estimate of $7.47 but declined 5.4% year over year. Net income attributable to T. Rowe Price was $1.79 billion, jumping 14.8%. Net revenues in the fourth quarter increased 7.7% year over year to $1.64 billion.
The top line surpassed the Zacks Consensus Estimate of $1.62 billion. In 2023, net revenues were $6.46 billion, down marginally year over year. The top line met the consensus estimate. Capital allocation-based income jumped 51.7% to $40.2 million. We projected investment advisory fees and capital allocation-based income of $1.40 billion and $36 million, respectively.
Ameriprise Financial, Inc.’s (AMP - Free Report) fourth-quarter 2023 adjusted operating earnings (excluding regulatory accrual, severance and mark-to-market impacts on share-based compensation expenses) of $7.75 per share handily surpassed the Zacks Consensus Estimate of $7.67. The bottom line reflects a rise of 14% from the year-ago quarter. Results were aided by revenue growth, along with higher AUM and AUA balances. However, an increase in expenses was negative. Probably due to this, shares of the company lost 5% in the after-market trading following the earnings release.
After considering significant items, net income (GAAP basis) was $377 million or $3.57 per share, down from $649 million or $5.83 per share in the prior-year quarter. Our estimate for the metric was $675.2 million.
For 2023, adjusted operating earnings (excluding unlocking and regulatory accrual, severance, and mark-to-market impacts on share-based compensation expenses) of $30.46 per share handily surpassed the Zacks Consensus Estimate of $29.36. The bottom line suggests a rise of 24% from the previous year. Net income (GAAP basis) was $2.56 billion, down from $3.15 billion in the previous year. Our estimate for the metric was $2.85 billion.