Principal Financial Group, Inc
) has successfully managed to keep its positive surprise streak
alive for seven straight quarters. Operating net income of $1.08
per share for the second quarter of 2014 outperformed the Zacks
Consensus Estimate by about 7% and improved nearly 19% year over
Principal Financial Group, Inc - Earnings
Surprise | FindTheBest
Including net realized capital gains of 10 cents, and
unfavorable adjustment of 15 cents, net income available to common
stockholders was a record of $1.03 cents per share, up 37% year
Increased focus on fee-based businesses along with improved
investment income drove the top line higher, and more than offset
the increase in expenses thereby aiding solid earnings at Principal
Behind the Headlines
Operating revenues in the second quarter increased 10% year over
year to $2.5 billion. A 13% rise in premiums and other
considerations, a 6.3% increase in fees and other revenues and a
10% improvement in net investment income drove the upside.
Revenues marginally outpaced the Zacks Consensus Estimate.
Total expense incurred by Principal Financial increased 8% year
over year to $2.1 billion. Increase in benefits, claims and
settlement expenses and commissions accounted for the increase in
Principal Financial's assets under management in the quarter were a
record $517.9 billion as of Jun 30, 2014, up 15% year over year.
Book value per share as of Jun 30, 2014, stood at $31.52, up 6%
year over year.
Retirement and Investor Services
: Revenues in the quarter improved nearly 10% year over year to
Operating earnings increased 26% year over year to $181.4 million
on improved top line and controlled expenses.
Principal Global Investors
: Revenues in this segment amounted to $173.2 million, 3% higher
than the prior-year period, driven by higher management fees due to
Operating earnings declined 6% year over year to $27.4 million.
: Revenues were $390.8 million in the quarter, up 16% year over
year, driven by growth in AUM from positive net cash flows.
Operating earnings improved 17% year over year to $68 million in
US Insurance Solution
: Revenues were $811.4 million, up 5% year over year.
Operating income was $49 million, up about 3.8% year over year.
: Operating loss narrowed to $33.4 million from a loss of $35.4
million recorded in the second quarter of 2013.
Dividend and Share Repurchase Update
The board of directors of Principal Financial approved a quarterly
dividend of 34 cents per share, representing a 6% sequential
increase. The dividend will be paid on Sep 26 to shareholders of
record on Sep 8.
Principal Financial also paid a dividend of 32 cents per share on
With respect to share repurchases, the company spent about $6.1
million to buy back 1.3 million shares.
Increased focus on fee-based revenue sources helped Principal
Financial earn steady income and return capital to its shareholders
through dividends, or deploy the same in strategic
acquisitions. Principal Financial expects capital deployment
near the high end of the $500-$700 million range.
Given the strategic acquisitions that the company has undertaken,
its inorganic growth story also looks attractive. The company
remains optimistic on the opportunities in the emerging markets.
Principal Financial also noted that business model diversification
coupled with successful execution of investment management strategy
sustained the growth momentum for the investment manager.
Principal Financial presently carries a Zacks Rank #2 (Buy).
Results of a Few Other Investment Managers
While The Blackstone Group L.P. (
) outperformed the Zacks Consensus Estimate on rise in performance
fees, BlackRock, Inc. (
) bettered the same on strong inflows. Yet another investment
manager, Janus Capital Group Inc. (
) surpassed the estimate aided by higher revenues.
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
JANUS CAP GRP (JNS): Free Stock Analysis Report
BLACKSTONE GRP (BX): Free Stock Analysis Report
PRINCIPAL FINL (PFG): Free Stock Analysis
BLACKROCK INC (BLK): Free Stock Analysis Report
To read this article on Zacks.com click here.