On Jun 17, 2014, Zacks Investment Research upgraded
Principal Financial Group Inc.
) to a Zacks Rank #2 (Buy).
Why the Upgrade?
Principal Financial has been witnessing rising earnings estimates
on the back of strong first-quarter 2014 results, dividend hike and
new share repurchase authorization. Moreover, this well-known
investment management company delivered positive earnings surprises
in all of the last 4 quarters with an average beat of 8.22%. The
long-term expected earnings growth rate for this stock is
Principal Financial reported first-quarter earnings on May 24.
Operating earnings per share came in at $1.06, surpassing the Zacks
Consensus Estimate by 15.2% and higher than the year-ago quarter
figure by 34.2%. Improvement in the fee-based businesses and
investment income mainly led to the year-over-year increase.
Additionally, the board of directors of Principal Financial
approved a 14% increase in its quarterly dividend. Per the hike,
the new dividend is 32 cents per share. Based on the closing share
price of $49.88 in the last trading session, this new dividend
translates into a yield of 2.60%, higher than the sector average of
2.14% and that of other players in the industry like
Cohen & Steers Inc.
Ameriprise Financial, Inc.
) with dividend yield of 2.10% and 1.98%, respectively. Principal
Financial also approved a $200 share repurchase program. The
dividend hike and the new share repurchase program reflect the
company's financial strength.
The Zacks Consensus Estimate for 2014 increased 5.7% to $4.10 per
share as most of the estimates were revised higher over the last 60
days. For 2015, almost all of the estimates were revised higher
over the same time frame, lifting the Zacks Consensus Estimate by
3.3% to $4.37 per share.
Other Stocks to Consider
Other players in the investment management space that look
attractive at current levels include Cohen & Steers, Ameriprise
Woori Finance Holdings Co., Ltd.
). While Cohen & Steers and Woori Finance sport a Zacks Rank #1
(Strong Buy), Ameriprise has the same Zacks Rank as Principal
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