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Why Is Principal Financial (PFG) Up 0.7% Since Last Earnings Report?
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A month has gone by since the last earnings report for Principal Financial (PFG - Free Report) . Shares have added about 0.7% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Principal Financial due for a pullback? 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 drivers.
Principal Financial Q4 Earnings Top, Revenues Rise Y/Y
Principal Financial Group, Inc.’s 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.
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.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
Currently, Principal Financial has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. Following the exact same course, 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 upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Principal Financial has a Zacks Rank #2 (Buy). We expect an above average 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, T. Rowe Price (TROW - Free Report) , has gained 12.5% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
T. Rowe reported revenues of $1.64 billion in the last reported quarter, representing a year-over-year change of +7.7%. EPS of $1.72 for the same period compares with $1.74 a year ago.
For the current quarter, T. Rowe is expected to post earnings of $1.87 per share, indicating a change of +10.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +3% over the last 30 days.
T. Rowe has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.
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Why Is Principal Financial (PFG) Up 0.7% Since Last Earnings Report?
A month has gone by since the last earnings report for Principal Financial (PFG - Free Report) . Shares have added about 0.7% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Principal Financial due for a pullback? 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 drivers.
Principal Financial Q4 Earnings Top, Revenues Rise Y/Y
Principal Financial Group, Inc.’s 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.
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.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
Currently, Principal Financial has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. Following the exact same course, 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 upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Principal Financial has a Zacks Rank #2 (Buy). We expect an above average 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, T. Rowe Price (TROW - Free Report) , has gained 12.5% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
T. Rowe reported revenues of $1.64 billion in the last reported quarter, representing a year-over-year change of +7.7%. EPS of $1.72 for the same period compares with $1.74 a year ago.
For the current quarter, T. Rowe is expected to post earnings of $1.87 per share, indicating a change of +10.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +3% over the last 30 days.
T. Rowe has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.