Want to participate in a research study? Help shape the future of investing tools and earn a $60 gift card!
Looking at Principal Financial Group, Inc.'s (NASDAQ:PFG) earnings update in December 2018, analyst forecasts seem pessimistic, with earnings expected to decline by -4.7% in the upcoming year compared with the past 5-year average growth rate of 18%. Currently with a trailing-twelve-month profit of US$1.5b, the consensus growth rate suggests that earnings will drop to US$1.5b by 2020. Below is a brief commentary around Principal Financial Group's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here.
What can we expect from Principal Financial Group in the longer term?
Over the next three years, it seems the consensus view of the 7 analysts covering PFG is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for PFG, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
From the current net income level of US$1.5b and the final forecast of US$1.6b by 2022, the annual rate of growth for PFG’s earnings is 1.4%. EPS reaches $6.02 in the final year of forecast compared to the current $5.41 EPS today. Analysts are predicting this high revenue growth to squeeze profit margins over time, from 11% to 8.8% by the end of 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Principal Financial Group, I've put together three key factors you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Principal Financial Group worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Principal Financial Group is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Principal Financial Group? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.