Principal Financial Group, Inc. PFG is poised for growth on the back of its higher sales of the single premium group, financial flexibility and effective capital deployment.
Growth Projections
The Zacks Consensus Estimate for Principal Financial’s 2023 earnings per share is pegged at $7.75, indicating a year-over-year increase of 15.6%. The expected long-term earnings growth rate is pegged at 9.1%.
Zacks Rank & Price Performance
Principal Financial currently carries a Zacks Rank #3 (Hold). The stock has rallied 23.1% against the industry’s decline of 10.7% in the past year.
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Earnings Surprise History
Principal Financial has a decent earnings surprise history. It beat estimates in each of the last four quarters, the average beat being 11.06%.
Business Tailwinds
Principal Financial should continue to benefit from its strength and leadership in retirement and long-term savings; group benefits and protection in the United States; retirement and long-term savings in Latin America and Asia; and global asset management.
Principal Financial expects to grow its operating earnings per share at a rate of 10-13%.
Riding on higher premiums and other considerations, fees and other revenues and higher net investment income across Principal Financial’s segments, its top line is expected to improve in the long run.
Net revenues at Retirement and Income Solutions segment - Fee are expected to be $2.1 billion, up 3% to 6% in 2022. Higher sales of the single premium group and individual annuities with life contingencies, higher fees stemming from an increase in mean account values, which resulted from continued growth in the equity markets, are likely to boost the performance of the segment.
Principal International is likely to benefit from higher single premium annuity sales in Chile. The segment’s operating earnings should gain from foreign currency tailwinds.
Principal Financial’s assets under management should continue to gain from positive net cash flow over the trailing 12 months, strong investment performance, and the migration of institutional retirement and trust retirement assets.
In 2022, combined net revenues at Principal International are projected to be $963 million, suggesting a decline of 2% to a rise of 2%. Premium and fees at Specialty Benefits are estimated to be $2.5 billion, indicating growth of 6-10%. The loss ratio at Specialty Benefits is estimated between 60% and 64%.
Principal Financial boasts a strong capital position, with sufficient cash generation capabilities and liquidity. The investment manager exited 2021 with $2.6 billion of excess and available capital. For 2022, PFG expects to maintain a leverage ratio of 20-25%.
In 2021, Principal Financial returned $1.6 billion in capital to its shareholders. The investment manager estimates returning $2.5-$3 billion of capital to shareholders in 2022, consisting of $2-$2.3 billion in share repurchases and a 40% dividend payout ratio. Average shares outstanding are estimated between 248 million and 256 million. PFG also boasts a solid dividend yield of 3.5%, higher than the industry average of 2.8%.
Stocks to Consider
Some better-ranked stocks from the finance sector are Ares Management Corporation ARES, Blue Owl Capital Inc. OWL and Ameriprise Financial, Inc. AMP, currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Ares Management’s earnings surpassed the Zacks Consensus Estimate in two of the last four quarters and missed in the other two, the average beat being 7.88%. In the past year, ARES has gained 49.6%.
Ares Management’s expected long-term earnings growth rate is pegged at 26.8%, higher than the industry average of 13.7%. The Zacks Consensus Estimate for 2022 and 2023 earnings indicates 27.2% and 21.5% year-over-year growth, respectively.
Blue Owl Capital’s earnings surpassed estimates in each of the last four quarters, the average beat being 9.09%. In the past year, OWL has gained 25.1%.
The Zacks Consensus Estimate for BSIG’s 2022 and 2023 earnings has moved 22.6% and 8.3% north in the past 60 days. The Zacks Consensus Estimate for 2023 earnings indicates 20% year-over-year growth.
Ameriprise Financial’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average beat being 7.6%. In the past year, Ameriprise Financial has rallied 37.3%.
The Zacks Consensus Estimate for AMP’s 2022 and 2023 earnings has moved 5.2% and 8.1% north in the past 60 days. The Zacks Consensus Estimate for 2022 and 2023 earnings indicates 13.98% and 14.37% year-over-year growth, respectively.
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Ameriprise Financial, Inc. (AMP) : Free Stock Analysis Report
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