Principal Financial (PFG) to Post Q3 Earnings: What to Expect - Zacks Investment Research

Principal Financial Group, Inc. (PFG - Free Report) is slated to report third-quarter 2022 earnings on Oct 27, after market close. PFG delivered an earnings surprise in each of the last four quarters, the average being 11.61%.

Factors at Play

Principal Financial third-quarter results are likely to reflect higher variable investment income, higher earnings from equity method investments, growth in the Specialty Benefits business, positive market returns and lower expenses.

Premiums in the Retirement and Income Solutions segment are likely to have decreased due to lower sales of the single premium group and exited individual annuities with life contingencies.

Investment income is expected to have benefited from higher variable investment income, growth in invested assets, higher inflation-based investment returns on Latin America average invested assets and cash as well as the sale of certain value-add real estate. The Zacks Consensus Estimate for net investment income is pegged at $833 million. We expect net investment income to be $932.1 million.

Higher earnings from equity method investments in Brazil, higher inflation-based investment returns on average invested assets and cash and favorable relative market performance on required regulatory investments are likely to have benefited revenue growth in the to-be-reported quarter. Growth in the Specialty Benefits business and Individual Life insurance business, primarily related to the Reinsurance Transaction, is likely to have added to the top line.

The Zacks Consensus Estimate for third-quarter 2022 revenues is pegged at $3.1 billion, indicating a decline of 15.7% from the year-ago quarter reported figure. We expect total revenues to be $3.2 billion.

Assets under management is likely to have benefited from favorable market performance, higher net customer cash flow and positive market returns.

Expenses are likely to have decreased due to lower benefits, claims and settlement expenses and dividends to policyholders. We expect total expenses to be $2.9 billion.

Operating expenses are likely to have increased due to an increase in strategic review costs and impacts related to the exited business. The increase is likely to have been partially offset by a decrease in amounts credited to employee accounts in a nonqualified defined contribution pension plan. We expect operating expenses to be $1.1 billion.

Continued share buybacks are likely to have provided additional upside to the bottom line.

The Zacks Consensus Estimate for third-quarter 2022 earnings stands at $1.45 per share, indicating a decline of 14.2% 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. This is because a stock needs to have the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increase the chances of an earnings beat, which is the case here.

Earnings ESP: Principal Financial has an Earnings ESP of -0.92%. This is because the Most Accurate Estimate is pegged at $1.44, lower than the Zacks Consensus Estimate of $1.45. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Principal Financial currently carries a Zacks Rank #3.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Some stocks from the finance sector with the right combination of elements to surpass estimates this time around are as follows:

Atlas Corp. (ATCO - Free Report) has an Earnings ESP of +10.00% and a Zacks Rank of 2. The Zacks Consensus Estimate for Atlas’s third-quarter 2022 earnings is pegged at 40 cents per share, indicating a decline of 28.6% from the year-ago reported figure.

ATCO’s earnings beat estimates in one of the last four quarters and missed in the other three.

AssetMark Financial Holdings, Inc. (AMK - Free Report) has an Earnings ESP of +0.41% and a Zacks Rank of 3. The Zacks Consensus Estimate for AssetMark Financial’s third-quarter 2022 earnings is pegged at 41 cents per share, indicating an increase of 2.5% from the year-ago reported figure.

AMK’s earnings beat estimates in three of the last four quarters and missed in the other one.

Ares Management Corporation (ARES - Free Report) has an Earnings ESP of +5.03% and a Zacks Rank of 3. The Zacks Consensus Estimate for Ares Management’s third-quarter 2022 earnings is pegged at 73 cents per share, indicating an increase of 17.7% from the year-ago reported figure.

ARES’s earnings beat estimates in two of the last four quarters and missed in the other two.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Principal Financial (PFG) to Post Q3 Earnings: What to Expect - Zacks Investment Research
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