It has been about a month since the last earnings report for Principal Financial (PFG). Shares have lost about 10.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Principal Financial due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Principal Financial Q4 Earnings In Line With Estimates
Principal Financial Group, Inc.’s fourth-quarter 2019 operating net income of $1.41 per share matched the Zacks Consensus Estimate and grew 27% year over year.
Results reflected improved performance at Retirement and Income Solution-Fee business, Principal Global Investors and U.S. Insurance Solutions segments. Also, Principal Financial recorded growth in assets under management (AUM). The company’s investment performance also remained solid.
Behind the Headlines
Operating revenues rose 6.6% year over year to nearly $4.1 billion. Higher fees and other revenues plus net investment income drove this upside. The top line beat the Zacks Consensus Estimate by 0.6%.
Total expenses increased 4.2% year over year to $3.7 billion due to higher operating expenses.
Principal Financial’s AUM as of Dec 31, 2019 was a record $735 billion, up 17.3% year over year.
Retirement and Income Solution: Revenues increased 5.3% year over year to about $2.3 billion.
Pre-tax operating earnings increased 12.8% to $207.5 million on account of improved performance at Retirement and Income Solution-Fee business.
Principal Global Investors: Revenues of $437.4 million plunged 23.1% from the prior-year quarter.
Operating earnings increased 40.6% to $144 million.
Principal International: Revenues increased 4.4% year over year to $326.5 million in the quarter.
Operating earnings increased 34.1% to $77.5 million.
U.S. Insurance Solution: Revenues grew 6.3% year over year to $1.1 billion.
Operating earnings of $144.5 million increased 27.9% year over year due to improved performance at Individual Life Insurance and Specialty Benefits Insurance business.
Corporate: Operating loss of $95.7 million was wider than $78.2 million loss incurred a year ago. This downside was due to higher expenses.
As of Dec 31, 2019, cash and cash equivalents were $2.5 billion, down 15.5% year over year.
At fourth-quarter end, debt was $3.7 billion, up 14.5%.
As of Dec 31, 2019, book value per share (excluding AOCI other than foreign currency translation adjustment) was $44.25, up 5.8% year over year.
Principal Financial paid out $152.4 million in dividends and bought back shares worth $83.5 million in the fourth quarter.
The board of directors approved fourth-quarter dividend of 55 cents per share, up 1.8% year over year.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
At this time, Principal Financial has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Principal Financial has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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