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Principal Financial (PFG) Misses on Q3 Earnings, Ups Dividend

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Principal Financial Group, Inc .'s PFG third-quarter 2018 reported operating net income of $1.67 per share, which missed the Zacks Consensus Estimate by 2.3%. However, the bottom line improved 30.5% year over year.

Principal Financial Group, Inc. Price, Consensus and EPS Surprise

Principal Financial Group, Inc. Price, Consensus and EPS Surprise | Principal Financial Group, Inc. Quote

Principal Financial delivered growth in assets under management. The company's investment performance also remained solid. Moreover, the company displayed a balanced approach to capital management.

The quarter included the results of significant variances including the annual actuarial assumption review, which benefited net income by 12 cents per share.

Behind the Headlines

Operating revenues increased 10.2% year over year to $4.4 billion. Higher premiums and other considerations, fees and other revenues as well as net investment income drove this upside. The top line also beat the Zacks Consensus Estimate by 12.8%.

Total expenses rose 8.9% year over year to $3.8 billion on higher benefits, claims and settlement expense as well as operating expenses.

Principal Financial's Asset Under Management (AUM) as of Sep 30, 2018 amounted to $667.8 billion, up 2% year over year.

Segment Update

Retirement and Income Solution : Revenues improved 2.9% year over year to about $2.4 billion.

Pre-tax operating earnings increased 23.7% year over year to $259.8 million owing to solid performance at Retirement and Income Solution - Fee business as well as at Retirement and Income Solution - Spread business.

Principal Global Investors : Revenues of $632.8 million were up 72.2% from the prior-year quarter.

Operating earnings shot up 65.4% year over year to $215.4 million.

Principal International : Revenues rose 4.6% year over year to $287.4 million in the third quarter.

Operating earnings dropped 55.2% year over year to $32.4 million.

U.S. Insurance Solution : Revenues grew 4.4% year over year to $1 billion.

Operating earnings of $118.2 million soared 42% year over year, driven by better performances at Individual Life Insurance business.

Corporate : Operating loss of $32.4 million was narrower than $43 million loss incurred a year ago. The company expects $190-$210 million in operating loss for 2018.

Financial Update

As of Sep 30, 2018, cash and cash equivalents were $2.9 billion, up 4.7% year over year.

At third-quarter end, debt was $3.3 billion, up from $3.2 billion from the year-ago level.

As of Sep 30, 2018, book value per share (excluding AOCI other than foreign currency translation adjustment) was $41.90, up 2.9% year over year.

Dividend and Share Repurchase Update

The company paid $150.7 million in dividends and deployed $64.9 million to buy back 1.1 million shares.

The board of directors of Principal Financial announced a dividend of 54 cents per share for the third quarter of 2018, translating into a 10% rise over the last quarter of 2017. The same also marks the 11th straight hike.

Principal Financial retained its guidance for 2018 capital deployment in a target range of $0.9-$1.3 billion.

Zacks Rank

Principal Financial carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Performance of Other Investment Managers

In the third quarter, the bottom line of Ameriprise Financial, Inc. AMP and AllianceBernstein Holding L.P AB beat the respective Zacks Consensus Estimate while that of Legg Mason, Inc. LM missed the same.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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