Will Principal Financial Pull Off a Surprise in Q1 Earnings?

Zacks Equity Research

Tue, Apr 22, 2025, 6:53 AM 4 min read

Factors at Play

Principal Financial’s first-quarter results are likely to reflect a rise in fee revenues, higher yields, favorable market performance and higher sales of single premium group annuities.

Operating revenues are likely to have increased owing to higher premiums & other considerations as well as higher fees & other revenues in Retirement and Income Solutions, Principal Asset Management and Benefits and Protection. The Zacks Consensus Estimate for first-quarter 2025 revenues is pegged at $3.97 billion, indicating an increase of nearly 4.4% from the year-ago reported number.

Higher management fee revenues as a result of increased average AUM are likely to have led to better performance at Investment Management. Lower performance fee revenues, primarily in the real estate business, and an increase in variable compensation expense and variable AUM expenses, as well as a rise in non-variable staff costs, are likely to have offset the upside.

Increased earnings from equity method investments in Brazil primarily and favorable relative market performance on required regulatory investments are expected to have benefited International Pension operations. Foreign currency headwinds are likely to have offset the upside.

Investment income is expected to have benefited from higher yields and average invested assets in fixed maturities, commercial mortgages and cash in U.S. operations and higher income on derivatives associated with fair value hedges. Foreign currency headwinds are likely to have offset the upside. We expect net investment income to be $1.1 billion in first-quarter 2025.

Assets under management are likely to have benefited from favorable market performance in equity, fixed income and real estate.

Expenses are likely to have increased due to higher benefits, claims and settlement expenses. We expect operating expenses to be $1.3 billion.

The Zacks Consensus Estimate for first-quarter earnings is pegged at $1.85 per share, suggesting an increase of 12.1% from the prior-year quarter’s reported figure.

What Our Quantitative Model Predicts

Our proven model predicts an earnings beat for Principal Financial this time around. This is because the stock has the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Earnings ESP: Principal Financial has an Earnings ESP of +0.31% at present. This is because the Most Accurate Estimate of $1.86 is pegged higher than the Zacks Consensus Estimate of $1.85. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.