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What's in Store for Principal Financial (PFG) in Q2 Earnings?

Zacks Equity Research

Principal Financial Group, Inc. PFG is slated to report second-quarter 2019 results on Jul 25, after market close. In the last reported quarter, the company delivered positive surprise of 8.33%

Let’s see how things are shaping up for this announcement.

Principal Financial second-quarter earnings are likely to benefit from its expanded distribution network, strength and leadership in retirement and long-term savings, group benefits and protection in the United States, increase in retirement and long-term savings in Latin America and Asia plus global asset management.

Higher fee-based revenues and an increase in investment income are likely to drive revenue improvement. The Zacks Consensus Estimate for revenues is pegged at $3.8 billion, indicating 20.5% increase from the year-ago reported figure.

Investment income is likely to benefit from improved interest rate environment.

Improved results at three asset management and asset accumulation segments, driven by extensive distribution footprint, best-in-class solutions, strategic buyouts and operational discipline are expected to boost performance of assets under management.

Principal Global Investors is likely to remain under pressure due to higher demand for lower-cost investment options and volatility in capital markets.

Operating expenses are likely to increase as a result of higher branding expenses, benefit costs as well as variable sales expenses.

However, continued share repurchases should lend support to the bottom line.

The Zacks Consensus Estimate for earnings stands at $1.40 per share, indicating an increase of 3.7% from the year-ago reported figure.

What Our Quantitative Model Predicts

Our proven model conclusively shows that Principal Financial is likely to beat on earnings this reporting season. This is because the stock has the right combination of a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Earnings ESP: Principal Financial has an Earnings ESP of +1.08%. This is because the Most Accurate Estimate of $1.41 is higher than the Zacks Consensus Estimate of $1.40. You can uncover the best stocks to buy or sell before they are 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-eps-surprise | Principal Financial Group, Inc. Quote

Zacks Rank: Principal Financial carries a Zacks Rank #2. The combination of Principal Financial’s Zacks Rank #2 and positive ESP makes us reasonably confident of an earnings beat in the upcoming release.

We caution against Zacks Rank #4 or 5 (Strong Sell) stocks going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider    

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

T. Rowe Price Group, Inc. TROW has an Earnings ESP of +0.33% and a Zacks Rank of 1. The company will announce second-quarter earnings on Jul 24. You can see the complete list of today’s Zacks #1 Rank stocks here.

Federated Investors, Inc. FII is set to report second-quarter earnings on Jul 25. The stock has an Earnings ESP of +1.26% and a Zacks Rank of 3.

Franklin Resources, Inc. BEN has an Earnings ESP of +1.13% and a Zacks Rank #1. The company is slated to release second-quarter earnings on Jul 30.

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