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Principal Financial Group, Inc. PFG has been favored by investors on the back of strategic buyouts, financial flexibility, strong retention, business growth, positive net cash flow and effective capital deployment.
PFG’s Zacks Rank & Price Performance
Principal Financial currently carries a Zacks Rank #3 (Hold). The stock has lost 0.9% in the past year against the industry’s growth of 11.1%.
PFG Price Performance
Image Source: Zacks Investment Research
Estimates for Principal Financial
The Zacks Consensus Estimate for Principal Financial’s 2025 earnings per share and revenues indicates an increase of 19.3% and 6.2%, respectively, from the corresponding 2024 estimates.
Factors Benefiting PFG Stock
Principal Financial’s revenue growth is expected to improve in the long run, riding on higher premiums and other considerations, fees and other revenues, and improved net investment income across its segments.
The Principal International segment is likely to benefit from higher single-premium annuity sales in Chile. The segment’s operating earnings should gain from foreign currency tailwinds.
The Specialty Benefits Insurance business should continue to gain from record sales, strong retention and employment growth. Growth in the business, favorable claims and disciplined expense management should benefit its pre-tax operating earnings.
Strong institutional flows across equities, real estate and specialty fixed income, highlighting the value of diversified distribution through its institutional, retail and retirement channels, are likely to drive positive net cash flow.
Principal Financial’s extensive distribution footprint, strategic buyouts and operational discipline should enhance the assets under management growth.
PFG boasts a strong capital position, with sufficient cash generation capabilities and liquidity. To reflect the business mix and risk profile, PFG lowered the target RBC level from the previous 400% to a range of 375-400%.
For 2024, PFG remains well-positioned to deliver on enterprise long-term financial targets, with 9% to 12% growth in earnings per share and 75% to 85% free capital flow conversion.
PFG’s Distribution of Wealth
Principal Financial’s wealth distribution through share buybacks and dividend payments looks impressive. In the third quarter of 2024, PFG raised the dividend by 9% for the sixth consecutive quarter, aligned with the targeted 40% dividend payout ratio, demonstrating confidence in continued growth and overall performance. It also boasts a solid dividend yield of 3.6%, higher than the industry average of 2.4%.
PFG remains committed to returning excess capital to shareholders and continues to expect $1.5-$1.8 billion of capital deployment for 2024, including $800 million to $1.1 billion of share repurchases. Based on net income, excluding exited business, the company targets 35-45% share repurchases in 2024.