Principal Financial Group Inc
) is set to report fourth quarter and full year 2012 results on
Jan 31. In the last quarter, it posted an 8.2% negative surprise.
Let's see how things are shaping up for this announcement.
Factors this Past Quarter
Principal Financial's investment income is expected to be weighed
on by the low interest rate environment. The company had earlier
predicted that 2012 operating earnings would be affected by
1%-2%, if the low interest rate environment persists. The impact
may increase by 3%-8%, if it persists longer.
Nevertheless, its sound capital position and financial liquidity
are supportive of its expansion policies in the emerging markets
as they offer ample growth opportunities. Principal Financial
remains on track to deploy $800-$900 million in 2012 and expects
to spend $400-$600 million in 2013. It already enhanced its
dividend by 17%.
Our proven model does not conclusively show that Principal
Financial is likely to beat earnings this quarter. This is
because a stock needs to have both a positive Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank of #1, 2 or 3 for this to happen. This is not
the case here as you will see below.
Positive Zacks ESP
: That is because the Most Accurate estimate stands at 75 cents
while the Zacks Consensus Estimate is lower at 74 cents. That is
a difference of +1.35%.
Zacks Rank #5 (Strong Sell)
: Principal Financial's Zacks Rank #5 (Strong Sell) lowers the
predictive power. However, Zacks Rank #5 when combined with a
positive ESP makes surprise prediction difficult. We caution
against stocks with Zacks #4 and #5 Ranks (Sell rated stocks)
going into the earnings announcement, especially when the company
is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are some other companies you may want to consider as our
model shows they have the right combination of elements to post
an earnings beat this quarter:
CNO Financial Group, Inc
), Earnings ESP of +4.35% and Zacks Rank #2 (Buy).
Alterra Capital Holdings Limited
), Earnings ESP of +6.98 % and Zacks Rank #3 (Hold).
The Hartford Financial Services Group, Inc
), Earnings ESP of +16.67% and Zacks Rank #3 (Hold).
ALTERRA CAP HLD (ALTE): Free Stock Analysis
CNO FINL GRP (CNO): Free Stock Analysis
HARTFORD FIN SV (HIG): Free Stock Analysis
PRINCIPAL FINL (PFG): Free Stock Analysis
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