What Awaits Principal Financial (PFG) This Earnings Season?

Principal Financial Group, Inc. PFG is slated to report fourth-quarter 2022 earnings on Jan 30, after market close. PFG delivered an earnings surprise in each of the last four quarters, the average being 14.18%.

Factors at Play

Principal Financial fourth-quarter results are likely to reflect growth in the Specialty Benefits insurance business, higher sales of single premium group annuities with life contingencies and lower expenses.

Premiums in the Retirement and Income Solutions segment are likely to have increased because of higher sales of single premium group annuities with life contingencies.

Investment income is likely to have been affected by impacts of the Reinsurance Transaction in 2022 and lower market performance on alternative assets. The downside is likely to have been partially offset by higher inflation-based investment returns on Latin America average invested assets and cash. The Zacks Consensus Estimate for net investment income is pegged at $949 million, suggesting a decline of 23.4% from the year-ago reported figure. We expect net investment income to be $950 million.

Growth in the Specialty Benefits insurance business and increase in Individual Life insurance premiums related to the retrocession of ceded premiums as a result of the Reinsurance Transaction are likely to have benefited revenue growth in the to-be-reported quarter.

The Zacks Consensus Estimate for fourth-quarter 2022 revenues is pegged at $3.3 billion, indicating a decline of 20.8% from the year-ago quarter reported figure. We expect total revenues to be $3.2 billion.

Assets under management is likely to have benefited from favorable market performance, higher net customer cash flow and positive market returns.

Expenses are likely to have decreased due to lower benefits, claims and settlement expenses and dividends to policyholders. We expect total expenses to be $2.9 billion.

Operating expenses are likely to have decreased due to favorable impact associated with actuarial assumption updates and model refinements in 2022 as well as decrease in amounts credited to employee accounts in a nonqualified defined contribution pension plan. We expect operating expenses to be $1.1 billion.

Continued share buybacks are likely to have provided additional upside to the bottom line.

The Zacks Consensus Estimate for fourth-quarter 2022 earnings stands at $1.52 per share, indicating a decline of 17.8% from the year-ago reported figure.

What Our Quantitative Model Predicts

Our proven model predicts an earnings beat for Principal Financial this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Earnings ESP: Principal Financial has an Earnings ESP of +0.33%. This is because the Most Accurate Estimate is pegged at $1.53, higher than the Zacks Consensus Estimate of $1.52. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Principal Financial Group, Inc. Price and EPS Surprise

Principal Financial Group, Inc. price-eps-surprise | Principal Financial Group, Inc. Quote

Zacks Rank: Principal Financial currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks to Consider

Some stocks from the finance sector with the right combination of elements to surpass estimates this time around are as follows:

Affiliated Managers Group, Inc. AMG has an Earnings ESP of +3.95% and a Zacks Rank of 3. The Zacks Consensus Estimate for Affiliated Managers’ fourth-quarter 2022 earnings is pegged at $6.79 per share, indicating an increase of 11.3% from the year-ago reported figure.

AMG’s earnings beat estimates in each of the four trailing quarters.

AssetMark Financial Holdings, Inc. AMK has an Earnings ESP of +0.58% and a Zacks Rank of 3. The Zacks Consensus Estimate for AssetMark Financial’s fourth-quarter 2022 earnings is pegged at 43 cents per share, indicating an increase of 30.3% from the year-ago reported figure.

AMK’s earnings beat estimates in three of the last four quarters and missed in the other one.

Ares Management Corporation ARES has an Earnings ESP of +5.66% and a Zacks Rank of 3. The Zacks Consensus Estimate for Ares Management’s fourth-quarter 2022 earnings is pegged at $1.06 per share, indicating an increase of 24.7% from the year-ago reported figure.

ARES’ earnings beat estimates in three of the last four quarters and missed in the other one.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Principal Financial Group, Inc. (PFG) : Free Stock Analysis Report

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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.

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