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What Awaits Principal Financial (PFG) This Earnings Season?

Zacks Equity Research

Principal Financial Group, Inc. PFG is slated to report second-quarter 2020 results on Jul 27, after market close. The company delivered a negative earnings surprise of 3.36% in the last reported quarter.

Let’s see what’s in store for the company this time around.

Principal Financial second-quarter results are expected to reflect the impacts of the COVID-19 pandemic. Assets under management are likely to have increased.

Given the pandemic as well as low interest rate environment, the company estimates a slowdown in pension risk transfer sales in the second quarter.

Principal Financial is likely to have benefited from its strength and leadership in retirement and long-term savings, group benefits in the United States, and retirement and long-term savings in Latin America, which are expected to have led to solid operating earnings.

Increase in premiums, growth in fee, spread and risk businesses, and higher net investment income are likely to have fueled revenue increase in the to-be-reported quarter.

Net investment income is likely to have benefited from higher average invested assets, improved inflation-based investment returns on average invested assets, and cash.

Assets under management are likely to have been aided by extensive distribution footprint of the company, best-in-class solutions, strategic buyouts, and operational discipline.

Expenses are likely to have increased due to higher benefits, claims and settlement expenses, and operating expenses.

Operating expenses are likely to have increased due to acquired business and increase in deferred acquisition costs (DAC) amortization, and unfavorable equity markets so far in 2020 compared to 2019.

The company anticipates modest growth in group benefits premiums and retirement recurring deposits in to-be-reported quarter, primarily due to increased layoffs, furloughs and reduced contributions to employee benefit plans due to the COVID-19 pandemic.

The Zacks Consensus Estimate for earnings stands at $1.30 per share, indicating a decline of 14.5% from the year-ago reported figure.

What Our Quantitative Model Predicts

Our proven model does not conclusively predict an earnings beat for Principal Financial this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Earnings ESP: Principal Financial has an Earnings ESP of -0.90%. This is because the Most Accurate Estimate of $1.28 is pegged lower than the Zacks Consensus Estimate of $1.30. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Principal Financial Group, Inc. Price and EPS Surprise

Principal Financial Group, Inc. Price and EPS Surprise
Principal Financial Group, Inc. Price and EPS Surprise

Principal Financial Group, Inc. price-eps-surprise | Principal Financial Group, Inc. Quote

Zacks Rank: Principal Financial carries a Zacks Rank #1.

Stocks to Consider

Some stocks from the investment management industry with the right combination of elements to surpass estimates this time around are as follows:

Affiliated Managers Group AMG has an Earnings ESP of +0.45% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Apollo Global Management APO has an Earnings ESP of +2.96% and a Zacks Rank #3.

Ares Management L.P. ARES has an Earnings ESP of +1.48% and a Zacks Rank of 3.

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Principal Financial Group, Inc. (PFG) : Free Stock Analysis Report
 
Affiliated Managers Group, Inc. (AMG) : Free Stock Analysis Report
 
Apollo Global Management, LLC (APO) : Free Stock Analysis Report
 
Ares Management L.P. (ARES) : Free Stock Analysis Report
 
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