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Principal Financial Okays $500M Share Buyback Authorization

The board of directors of Principal Financial Group, Inc. PFG has authorized a share buyback program to return more value to investors. The Zacks Rank #3 (Hold) investment manager is authorized to buy back $500 million in common stock.

As of Sep 30, 2018, the company was left with about $135 million from its $300 million share buyback program approved in May 2018. Share repurchases benefit a company’s earnings per share, book value as well as shareholder equity as shares outstanding decline. Share repurchase programs thus raise optimism among investors and boost their confidence on the stock.

The investment manager remains focused on boosting shareholders’ value through share repurchases and dividends. The company’s solid operational performance should support these endeavors. The company expects to achieve the high end of its capital deployment target between $0.9 and $1.3 billion (via quarterly dividends, strategic acquisitions and share buy backs) in 2018. To that end, the company deployed $1 billion capital in the first three quarters of 2018 to enhance shareholders’ value.

Principal Financial is well poised to meet its targeted capital deployment banking on operational excellence. The company boasts a solid capital and liquidity level. It exited third- quarter of 2018 with more than $1 billion at holding company, $500 million of capital in excess of a 420% risk-based capital ratio and more than $450 million available cash at its subsidiaries.

A balanced approach to capital deployment supports the company’s diversified and integrated businesses, meets the needs of clients and creates long-term shareholder value.

Shares of Principal Financial have lost 30.7% year to date compared with the industry’s decline of 20.6%. Strong segmental performance and robust capital position should help the stock turn around.

Stocks to Consider

Some better-ranked investment managers are Capital Southwest Corporation CSWC, Prospect Capital Corporation PSEC and Ameriprise Financial, Inc. AMP.

Capital Southwest specializes in credit and private equity and venture capital investments. The company delivered positive surprise of 21.43% in the last reported quarter. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank  stocks here.

Prospect Capital specializes in development, subordinated debt tranches of collateralized loan obligations, cash flow term loans, bridge transactions among others. The company delivered positive surprise of 9.52% in the last reported quarter. The stock sports a Zacks Rank #1

Ameriprise Financial provides various financial products and services to individual and institutional clients in the United States and internationally. The company delivered positive surprise of 3.60% in the last reported quarter. The stock carries a Zacks Rank #2 (Buy).

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