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Principal Financial (PFG) Q3 Earnings Beat, Improve Y/Y
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Principal Financial Group, Inc. (PFG - Free Report) reported third-quarter 2016 operating net income of $1.15 per share that beat the Zacks Consensus Estimate of $1.12 by 2.7%. The bottom line also improved 8.5% year over year.
The company’s investment performance remained strong and it expanded its solution set along with strengthening relationships with customers and distributors. The company also displayed a balanced approach to capital management.
Including net realized capital losses of 9 cents, net income available to common stockholders was $1.06 per share, up 5% year over year.
Behind the Headlines
Operating revenues in the quarter decreased 13.4% year over year to $2.8 billion. Also, revenues missed the Zacks Consensus Estimate of $3.1 billion by 8.1%.
Total expenses were down 16.1% year over year to $2.4 billion. This was primarily due to the decrease in benefits, claims and settlement expenses, commission expenses, depreciation and amortization, and compensation and other.
Principal Financial’s Asset Under Management (AUM) as of Sep 30, 2016 was a record $595.8 billion, up 15.4% from Sep 30, 2015.
As of Sep 30, 2016, book value per share was $37.52, up 17.4% year over year.
Segment Update
Retirement and Investor Services: Revenues decreased 29.2% year over year to $1.2 billion.
Operating earnings surged 54.9% year over year to $206.9 million.
Principal Global Investors: Revenues of $346.2 million increased nearly 5.1% from the prior-year quarter.
Operating earnings rose 18.3% year over year to $112.9 million owing to an increase in adjusted revenues and disciplined expense management.
Principal International: Revenues inched up 2.7% year over year in the quarter to $334.4 million.
Operating earnings surged 65.1% year over year to $84.2 million, mainly due to growth in the business.
US Insurance Solution: Revenues increased 6.7% year over year to $910.4 million.
Operating earnings were $70.2 million, down 59.4% year over year.
Corporate: Revenues were ($21.0) million compared with ($16.5) million in the year-ago quarter.
Operating loss of $57.8 million was wider than a loss of $54.0 million in the year-ago quarter.
Dividend and Share Repurchase Update
Principal Financial paid a quarterly dividend of 41 cents per share on Sep 30, 2016. In addition, the board of directors of Principal Financial declared a 5% increase in dividend to 43 cents for the fourth quarter. As a result, the company is moving closer to the 40% dividend payout ratio target.
Also, the company bought back 0.8 million shares worth $35.1 million during the reported quarter.
Principal Financial displayed strong capital position with full-year capital deployment target between $800 million and $1.0 billion.
Among the other players from the finance sector that have reported their third-quarter earnings so far, the bottom line at Progressive Corp.(PGR - Free Report) , The Travelers Companies Inc. (TRV - Free Report) and XL Group Ltd beat their respective Zacks Consensus Estimates.
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Principal Financial (PFG) Q3 Earnings Beat, Improve Y/Y
Principal Financial Group, Inc. (PFG - Free Report) reported third-quarter 2016 operating net income of $1.15 per share that beat the Zacks Consensus Estimate of $1.12 by 2.7%. The bottom line also improved 8.5% year over year.
The company’s investment performance remained strong and it expanded its solution set along with strengthening relationships with customers and distributors. The company also displayed a balanced approach to capital management.
Including net realized capital losses of 9 cents, net income available to common stockholders was $1.06 per share, up 5% year over year.
Behind the Headlines
Operating revenues in the quarter decreased 13.4% year over year to $2.8 billion. Also, revenues missed the Zacks Consensus Estimate of $3.1 billion by 8.1%.
Total expenses were down 16.1% year over year to $2.4 billion. This was primarily due to the decrease in benefits, claims and settlement expenses, commission expenses, depreciation and amortization, and compensation and other.
Principal Financial’s Asset Under Management (AUM) as of Sep 30, 2016 was a record $595.8 billion, up 15.4% from Sep 30, 2015.
As of Sep 30, 2016, book value per share was $37.52, up 17.4% year over year.
Segment Update
Retirement and Investor Services: Revenues decreased 29.2% year over year to $1.2 billion.
Operating earnings surged 54.9% year over year to $206.9 million.
Principal Global Investors: Revenues of $346.2 million increased nearly 5.1% from the prior-year quarter.
Operating earnings rose 18.3% year over year to $112.9 million owing to an increase in adjusted revenues and disciplined expense management.
Principal International: Revenues inched up 2.7% year over year in the quarter to $334.4 million.
Operating earnings surged 65.1% year over year to $84.2 million, mainly due to growth in the business.
US Insurance Solution: Revenues increased 6.7% year over year to $910.4 million.
Operating earnings were $70.2 million, down 59.4% year over year.
Corporate: Revenues were ($21.0) million compared with ($16.5) million in the year-ago quarter.
Operating loss of $57.8 million was wider than a loss of $54.0 million in the year-ago quarter.
Dividend and Share Repurchase Update
Principal Financial paid a quarterly dividend of 41 cents per share on Sep 30, 2016. In addition, the board of directors of Principal Financial declared a 5% increase in dividend to 43 cents for the fourth quarter. As a result, the company is moving closer to the 40% dividend payout ratio target.
Also, the company bought back 0.8 million shares worth $35.1 million during the reported quarter.
Principal Financial displayed strong capital position with full-year capital deployment target between $800 million and $1.0 billion.
PRINCIPAL FINL Price, Consensus and EPS Surprise
PRINCIPAL FINL Price, Consensus and EPS Surprise | PRINCIPAL FINL Quote
Zacks Rank
Principal Financial presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Performance of Other Stocks
Among the other players from the finance sector that have reported their third-quarter earnings so far, the bottom line at Progressive Corp.(PGR - Free Report) , The Travelers Companies Inc. (TRV - Free Report) and XL Group Ltd beat their respective Zacks Consensus Estimates.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>