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Principal Financial (PFG)
NASDAQ:PFG

Principal Financial (PFG) AI Stock Analysis

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Principal Financial

(NASDAQ:PFG)

Rating:73Outperform
Price Target:
Principal Financial Group's overall stock score reflects robust financial performance, especially in cash flow management, and a balanced earnings call with significant achievements. Despite technical indicators suggesting some short-term uncertainty and challenges in revenue growth, the company's reasonable valuation and solid dividend yield support a stable investment outlook.
Positive Factors
Business Transformation
PFG has executed on a business mix transformation and has a solid cash flow profile supported by its more capital-light mix and focus on the less competitive small and midsize market (SMB) marketplace.
Free Cash Flow
PFG divested more capital intensive retail fixed annuities and life insurance business lines to focus on employer-centric offerings, resulting in a FCF profile that ranks as above-average for conversion rate and growth outlooks.
Revenue Growth
The combination of PFG's SMB focus, exposure to the Retirement ecosystem, and Global Asset Management capabilities should generate 4-7% revenue growth vs 1-4% industry growth.
Negative Factors
Earnings Impact
PFG's international pension business earnings have been impacted by a stronger U.S. dollar over the past decade.
Investment Outflows
Investment Management saw $4.2bn in net outflows in the quarter due to a couple large accounts exiting the fund complex.
Market Sensitivity
PFG faces some secular challenges including declining fee rates in its retirement and asset management markets as well as macro sensitivities including elevated equity market sensitivity and FX impacts to earnings within its international pension operations.

Principal Financial (PFG) vs. SPDR S&P 500 ETF (SPY)

Principal Financial Business Overview & Revenue Model

Company DescriptionPrincipal Financial Group, Inc. (PFG) is a global financial services company headquartered in Des Moines, Iowa. The company operates in various sectors including insurance, retirement, and investment services, offering a comprehensive range of financial products and services. Principal provides solutions for individuals, businesses, and institutional clients, focusing on retirement plans, mutual funds, insurance products, and asset management services, helping their clients plan for and achieve financial security.
How the Company Makes MoneyPrincipal Financial Group generates revenue through several key streams. Primarily, the company earns money from managing retirement and investment products, including mutual funds and annuities, where they charge management fees based on the assets under management (AUM). Additionally, PFG receives premiums from its insurance products, which include life and disability insurance. The company also earns fees from its asset management services provided to institutional clients. Significant partnerships with financial advisors and other financial institutions enhance the distribution and reach of Principal's products and services, contributing to its earnings. The company's diversified approach across different financial sectors helps in mitigating risks and capitalizing on various market opportunities.

Principal Financial Financial Statement Overview

Summary
Principal Financial demonstrates a solid financial performance with strong cash flow management and reasonable profitability. Despite volatile revenue growth, the company maintains a stable balance sheet with manageable debt levels. The insurance industry context justifies some of the financial leverage observed.
Income Statement
78
Positive
The Income Statement shows robust profitability with a strong Gross Profit Margin consistently at 100% due to the nature of the industry. The Net Profit Margin stands at 8.60% for the TTM (Trailing-Twelve-Months), showing profitability but with room for improvement. Revenue growth has been volatile, with a notable decline of 25.15% from 2022 to 2024. EBIT Margin for TTM is 12.89%, indicating operational efficiency, while EBITDA Margin is 9.21% reflecting decent operating performance.
Balance Sheet
72
Positive
The Balance Sheet reflects a stable financial structure with a Debt-to-Equity Ratio of 0.39, indicating good leverage management. Return on Equity (ROE) for TTM is 9.26%, which is moderate, showing efficient use of equity to generate profits. The Equity Ratio is 3.58%, suggesting a high reliance on liabilities which is typical in the insurance industry but could pose risks if not managed carefully.
Cash Flow
83
Very Positive
The Cash Flow Statement indicates strong cash generation with a Free Cash Flow Growth Rate of 8.68% from the previous year. The Operating Cash Flow to Net Income Ratio is 4.81, demonstrating excellent cash conversion. The Free Cash Flow to Net Income Ratio is 4.74, highlighting efficient cash utilization relative to reported earnings.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
15.77B16.13B13.67B17.49B14.26B14.74B
Gross Profit
13.53B16.13B13.67B17.49B14.26B14.74B
EBIT
1.58B1.89B8.59B6.02B2.04B1.66B
EBITDA
1.23B0.000.006.28B0.000.00
Net Income Common Stockholders
1.09B1.57B623.20M4.76B1.58B1.40B
Balance SheetCash, Cash Equivalents and Short-Term Investments
27.53B29.94B27.19B67.74B80.49B81.56B
Total Assets
288.38B313.66B305.05B303.00B321.21B313.47B
Total Debt
3.98B4.11B3.99B4.08B4.36B4.36B
Net Debt
-186.20M-103.90M-715.70M-770.30M2.03B1.51B
Total Liabilities
276.78B302.19B293.84B292.70B304.70B296.60B
Stockholders Equity
11.19B11.09B10.92B10.00B16.13B16.56B
Cash FlowFree Cash Flow
4.93B4.53B3.69B3.06B3.09B3.63B
Operating Cash Flow
5.00B4.60B3.79B3.17B3.22B3.74B
Investing Cash Flow
-5.01B-5.40B-1.35B1.06B-5.66B-5.03B
Financing Cash Flow
-279.20M300.30M-2.59B-1.72B1.92B1.62B

Principal Financial Technical Analysis

Technical Analysis Sentiment
Negative
Last Price77.36
Price Trends
50DMA
78.48
Negative
100DMA
80.15
Negative
200DMA
80.72
Negative
Market Momentum
MACD
0.97
Negative
RSI
46.65
Neutral
STOCH
47.16
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PFG, the sentiment is Negative. The current price of 77.36 is below the 20-day moving average (MA) of 77.84, below the 50-day MA of 78.48, and below the 200-day MA of 80.72, indicating a bearish trend. The MACD of 0.97 indicates Negative momentum. The RSI at 46.65 is Neutral, neither overbought nor oversold. The STOCH value of 47.16 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PFG.

Principal Financial Risk Analysis

Principal Financial disclosed 56 risk factors in its most recent earnings report. Principal Financial reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Principal Financial Peers Comparison

Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
HIHIG
83
Outperform
$37.41B13.1218.49%1.51%7.55%14.16%
78
Outperform
$35.30B9.5218.42%25.29%-23.19%
PFPFG
73
Outperform
$18.23B17.439.70%3.61%5.84%-10.64%
EQEQH
71
Outperform
$16.32B14.6056.67%1.79%12.41%14.76%
64
Neutral
$12.78B9.877.67%17015.06%12.34%-5.99%
AEAEG
63
Neutral
$10.91B15.449.36%4.22%-5.03%
AIAIG
61
Neutral
$48.61B18.846.13%1.90%-44.30%-33.09%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
PFG
Principal Financial
77.36
-3.05
-3.79%
AEG
Aegon
6.98
0.52
8.05%
AIG
American International Group
82.63
5.38
6.96%
ACGL
Arch Capital Group
92.85
-4.81
-4.93%
HIG
Hartford Financial
129.62
28.99
28.81%
EQH
Equitable Holdings
51.84
12.07
30.35%

Principal Financial Earnings Call Summary

Earnings Call Date:Apr 24, 2025
(Q1-2025)
|
% Change Since: 3.15%|
Next Earnings Date:Jul 24, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture. While the company demonstrated strong EPS growth, increased AUM, and robust performance in retirement and pension risk transfer segments, it faced challenges with negative net cash flow, market volatility, and lower dental sales impacting overall growth. The sentiment of the call is balanced between positive achievements and significant challenges.
Q1-2025 Updates
Positive Updates
EPS Growth
First quarter adjusted non-GAAP earnings excluding significant variances was $439 million or $1.92 per diluted share, a 10% increase in EPS over the first quarter of 2024.
Capital Return to Shareholders
Returned $370 million of capital to shareholders in the first quarter, including $200 million of share repurchases and an increase in common stock dividend.
AUM Increase
Total company managed AUM increased to $718 billion at the end of the quarter, reflecting positive market performance and the beneficial impact of exchange rates.
Retirement Segment Performance
Generated positive account value net cash flow of $400 million and strong activity in small and mid-sized market with $1.3 billion of positive flows.
Pension Risk Transfer Growth
Pension risk transfer volume grew year over year, reaching $800 million in the quarter.
Negative Updates
Negative Net Cash Flow
Net cash flow was negative $4 billion in the quarter, driven by two low-fee institutional fixed income withdrawals in investment management.
Market Volatility Impact
Market volatility has been extreme, impacting fee revenue in retirement and asset management, with expectations for continued difficulty in upcoming quarters.
Lower Dental Sales in Specialty Benefits
Overall growth impacted by lower dental sales due to disciplined pricing actions and absence of new PFML markets.
Investment Management Seasonal Expenses
Investment management had $35 million of higher deferred compensation and payroll taxes compared to the fourth quarter.
Company Guidance
During the Principal Financial Group's First Quarter 2025 Earnings Conference Call, the company reported a 10% increase in adjusted non-GAAP earnings per share (EPS), amounting to $1.92 per diluted share, compared to the first quarter of 2024. They returned $370 million of capital to shareholders, including $200 million in share repurchases. Total company managed assets under management (AUM) increased to $718 billion, despite a net cash outflow of $4 billion due to two low-fee institutional fixed income withdrawals. The company highlighted strong performance in private real estate, preferred, and stable value asset classes, as well as $700 million in local investment management flows in Mexico and Southeast Asia. They also noted positive momentum in their retirement ecosystem, with $400 million in positive account value net cash flow and $1.3 billion of positive flows in the small and mid-sized market. The pension risk transfer volume reached $800 million, maintaining their position among the top four providers. Specialty benefits saw strong underwriting results, though growth was impacted by the absence of new paid family and medical leave markets and lower dental sales. The company's capital strategy remains robust, with $1.8 billion in excess and available capital, and they continue to focus on disciplined expense management and strategic growth across their business segments.

Principal Financial Corporate Events

Financial Disclosures
Principal Financial Reports Strong AUM Growth in March
Positive
Apr 17, 2025

As of March 31, 2025, Principal Financial Group reported assets under management totaling $717.9 billion, with $555.8 billion managed by Principal Asset Management – Investment Management and $133.5 billion by Principal Asset Management – International Pension. The company experienced a 1.4% positive impact on AUM due to foreign currency translation and market performance, highlighting its strategic allocations during market dislocations.

Spark’s Take on PFG Stock

According to Spark, TipRanks’ AI Analyst, PFG is a Neutral.

Principal Financial’s score of 66 reflects strong profitability improvements and strategic successes in expanding its retirement ecosystem. Despite inconsistent revenue growth and cash flow challenges, the company maintains moderate leverage and a reasonable valuation with a solid dividend yield. The positive earnings call sentiment further supports the stock, although technical indicators suggest some short-term uncertainty.

To see Spark’s full report on PFG stock, click here.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.