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Principal Financial (PFG)
NASDAQ:PFG
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Principal Financial
(NASDAQ:PFG)72Outperform
Positive Factors
Business Strategy
PFG's focus on the small/midsize business marketplace and synergies across its retirement, asset management, and employee benefits operations supports solid growth, return, and cash flow profiles.
Negative Factors
International Operations
PFG's international pension business earnings have been impacted by a stronger U.S. dollar over the past decade.
Market Challenges
PFG faces some secular challenges including declining fee rates in its retirement and asset management markets as well as macro sensitivities including elevated equity market sensitivity and FX impacts to earnings within its international pension operations.
Principal Financial (PFG) vs. S&P 500 (SPY)
Market Cap
$20.08B
Dividend Yield3.21%
Average Volume (3M)1.70M
Price to Earnings (P/E)13.3
Beta (1Y)1.06
Revenue Growth18.02%
EPS Growth171.70%
CountryUS
Employees19,800
SectorFinancial
Sector Strength93
IndustryAsset Management Services
Share Statistics
EPS (TTM)6.68
Shares Outstanding225,571,330
10 Day Avg. Volume1,536,026
30 Day Avg. Volume1,697,818
Financial Highlights & Ratios
PEG Ratio0.08
Price to Book (P/B)N/A
Price to Sales (P/S)1.25
Price to Cash Flow (P/CF)3.40
P/FCF Ratio3.40
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$85.40Price Target Upside-0.26% Downside
Rating ConsensusHold
Number of Analyst Covering11
Principal Financial Business Overview & Revenue Model
Company DescriptionPrincipal Financial Group, Inc. (PFG) is a global financial services company headquartered in Des Moines, Iowa. The company operates in various sectors including insurance, retirement, and investment services, offering a comprehensive range of financial products and services. Principal provides solutions for individuals, businesses, and institutional clients, focusing on retirement plans, mutual funds, insurance products, and asset management services, helping their clients plan for and achieve financial security.
How the Company Makes MoneyPrincipal Financial Group generates revenue through several key streams. Primarily, the company earns money from managing retirement and investment products, including mutual funds and annuities, where they charge management fees based on the assets under management (AUM). Additionally, PFG receives premiums from its insurance products, which include life and disability insurance. The company also earns fees from its asset management services provided to institutional clients. Significant partnerships with financial advisors and other financial institutions enhance the distribution and reach of Principal's products and services, contributing to its earnings. The company's diversified approach across different financial sectors helps in mitigating risks and capitalizing on various market opportunities.
Principal Financial Financial Statement Overview
Summary
Principal Financial shows strong profitability improvements with enhanced margins and return on equity. However, inconsistent revenue growth and negative free cash flow pose risks. The balance sheet indicates moderate leverage, which is manageable but requires monitoring.Income Statement
Principal Financial has shown significant improvement in profitability over the years with a notable increase in EBIT and Net Income. The net profit margin improved from 4.56% in 2021 to 9.74% in 2024, reflecting better cost management. However, revenue growth has been inconsistent, with a decline in 2024 after a peak in 2022. The EBIT margin has strengthened, showing operational efficiency improvements.72
Positive
Balance Sheet
The company maintains a stable equity base, with a debt-to-equity ratio of 0.37 in 2024, indicating moderate leverage. The equity ratio remains relatively low at 3.53%, reflecting the asset-heavy nature of the industry. Return on equity has improved to 14.17% in 2024, showcasing effective use of shareholders' funds despite the low equity ratio.65
Positive
Cash Flow
Cash flow performance is mixed, with negative free cash flow in 2024 due to a significant drop in operating cash flow. The operating cash flow to net income ratio has been volatile, currently negative, indicating challenges in converting net income into cash. The free cash flow to net income ratio also turned negative, highlighting potential liquidity concerns.55
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 16.13B | 13.67B | 17.49B | 14.26B | 14.74B | Gross Profit |
| 16.13B | 13.67B | 17.49B | 14.26B | 14.74B | EBIT |
| 0.00 | 8.59B | 6.02B | 2.04B | 1.66B | EBITDA |
| 0.00 | 0.00 | 6.28B | 0.00 | 0.00 | Net Income Common Stockholders |
| 1.57B | 623.20M | 4.76B | 1.58B | 1.40B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 29.94B | 27.19B | 67.74B | 80.49B | 81.56B | Total Assets |
| 313.66B | 305.05B | 303.00B | 321.21B | 313.47B | Total Debt |
| 4.11B | 3.99B | 4.08B | 4.36B | 4.36B | Net Debt |
| -103.90M | -715.70M | -770.30M | 2.03B | 1.51B | Total Liabilities |
| 302.19B | 293.84B | 292.70B | 304.70B | 296.60B | Stockholders Equity |
| 11.09B | 10.92B | 10.00B | 16.13B | 16.56B |
| Cash Flow | Free Cash Flow | |||
| 4.53B | 3.69B | 3.06B | 3.09B | 3.63B | Operating Cash Flow |
| 4.60B | 3.79B | 3.17B | 3.22B | 3.74B | Investing Cash Flow |
| -5.40B | -1.35B | 1.06B | -5.66B | -5.03B | Financing Cash Flow |
| 300.30M | -2.59B | -1.72B | 1.92B | 1.62B |
Principal Financial Technical Analysis
Positive
85.62
Price Trends
81.69
Positive
83.29
Positive
81.45
Positive
Market Momentum
1.47
Negative
53.18
Neutral
66.90
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PFG, the sentiment is Positive. The current price of 85.62 is above the 20-day moving average (MA) of 85.09, above the 50-day MA of 81.69, and above the 200-day MA of 81.45, indicating a bullish trend. The MACD of 1.47 indicates Negative momentum. The RSI at 53.18 is Neutral, neither overbought nor oversold. The STOCH value of 66.90 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PFG.
Principal Financial Risk Analysis
Principal Financial disclosed 56 risk factors in its most recent earnings report. Principal Financial reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Principal Financial Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $13.77B | 8.24 | 16.23% | 2.00% | 4.03% | 45.42% | |
72 Outperform | $20.08B | 13.34 | 14.17% | 3.21% | 18.02% | 171.70% | |
71 Outperform | $47.38B | 15.77 | -3.30% | 1.89% | -28.56% | 1.14% | |
67 Neutral | $6.11B | 1.95 | 39.61% | 4.75% | 47.95% | ― | |
65 Neutral | $55.56B | 13.72 | 16.13% | 2.54% | 6.10% | 225.22% | |
64 Neutral | $14.34B | 10.61 | 9.28% | 4.07% | 18.04% | -9.54% | |
61 Neutral | $38.79B | 14.61 | 9.78% | 4.63% | 34.25% | 11.22% |
* Financial Sector Average
Performance Comparison
PFG
Principal Financial
85.62
7.64
9.80%
AIG
American International Group
79.85
6.57
8.97%
LNC
Lincoln National
35.88
10.59
41.87%
MET
Metlife
81.56
12.56
18.20%
PRU
Prudential Financial
109.59
4.75
4.53%
UNM
Unum Group
77.91
28.67
58.23%
Principal Financial Earnings Call Summary
Earnings Call Date: Feb 6, 2025 | % Change Since: 7.03% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Positive
The earnings call highlighted Principal Financial Group's strong financial performance in 2024, characterized by impressive earnings growth, strategic successes in the retirement ecosystem, and significant capital returns to shareholders. However, challenges such as FX impacts on international pension earnings, sequential AUM decline, and competitive pressures in the dental market were noted. Overall, the company's achievements and strategic positioning outweigh the challenges faced.Highlights
Strong Earnings Growth
Adjusted non-GAAP earnings per share growth in 2024 was 11%, with a strong 16% increase in the fourth quarter.
Capital Return to Shareholders
Principal returned $1.7 billion of capital to shareholders in 2024, including $1 billion via share repurchases and a 10% increase in the annual common stock dividend.
Retirement Ecosystem Strategy Success
Principal expanded its suite of target date offerings and achieved an off-platform retirement investment mandate win of nearly $1 billion.
Asset Management Growth
The largest real estate fund raised over $3.6 billion, and new institutional clients represent 36% of the fund's total commitments.
Recognition and Awards
Principal was named one of America's Most Just Companies, ranking #11 on the 2025 Just 100 list, and recognized as a Best Place to Work in Money Management for the 13th consecutive year.
Lowlights
Sequential Decline in AUM
Total company-managed AUM ended 2024 at $712 billion, down 4% sequentially due to FX impacts and net cash flow.
International Pension FX Impact
International pensions pretax operating earnings were relatively flat compared to 2023 due to $26 million of FX impacts.
Pressure on RIS and VA Flows
Net outflows from the VA traditional block and pressures on RIS flows due to participant withdrawals and contract lapses.
Dental Market Competition
Competitive pressures in the dental market led to repricing actions and impacted sales in the second half of 2024.
Company Guidance
During the Principal Financial Group's Fourth Quarter 2024 Financial Results and 2025 Outlook Conference Call, the company provided comprehensive guidance for the upcoming year. Principal committed to an earnings per share growth target in the range of 9% to 12%, along with a free capital flow conversion target of 75% to 85%, and aims to expand its return on equity (ROE) towards the 14% to 16% range. The company returned $1.7 billion of capital to shareholders in 2024 and has authorized a new $1.5 billion share repurchase. While facing foreign currency impacts, Principal achieved a 3% increase in total company-managed assets under management (AUM) to $712 billion, with a year-end ROE improvement of 90 basis points. The retirement segment saw a 7% increase in recurring deposits, while specialty benefits experienced a 4% growth in average customer products. Looking to 2025, Principal is positioned to deliver on its financial targets, supported by strong capital deployment and strategic focus areas, including retirement ecosystems, small and midsized businesses, and global asset management.Principal Financial Corporate Events
Financial Disclosures
Principal Financial Reports $712.1 Billion in AUM
Neutral
Jan 22, 2025
As of December 31, 2024, Principal Financial Group reported assets under management totaling $712.1 billion, with significant portions managed domestically and internationally. The quarter saw a (3.7)% impact on AUM due to foreign currency translation and market performance, highlighting the importance of their diverse allocation strategy during market dislocations.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.