Critical Review: Principal Financial Group (PFG) versus Its Rivals

Principal Financial Group (NYSE: PFG) is one of 29 public companies in the “Life & Health Insurance” industry, but how does it contrast to its peers? We will compare Principal Financial Group to similar businesses based on the strength of its earnings, dividends, analyst recommendations, valuation, risk, institutional ownership and profitability.

Profitability

This table compares Principal Financial Group and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Principal Financial Group 12.35% 13.97% 0.64%
Principal Financial Group Competitors 5.02% 0.79% 1.23%

Dividends

Principal Financial Group pays an annual dividend of $1.88 per share and has a dividend yield of 2.9%. Principal Financial Group pays out 30.8% of its earnings in the form of a dividend. As a group, “Life & Health Insurance” companies pay a dividend yield of 2.2% and pay out 33.5% of their earnings in the form of a dividend. Principal Financial Group has increased its dividend for 5 consecutive years. Principal Financial Group is clearly a better dividend stock than its peers, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of current ratings and price targets for Principal Financial Group and its peers, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Principal Financial Group 1 6 2 0 2.11
Principal Financial Group Competitors 234 1127 1688 81 2.52

Principal Financial Group currently has a consensus target price of $66.78, indicating a potential upside of 1.41%. As a group, “Life & Health Insurance” companies have a potential upside of 7.41%. Given Principal Financial Group’s peers stronger consensus rating and higher probable upside, analysts plainly believe Principal Financial Group has less favorable growth aspects than its peers.

Valuation and Earnings

This table compares Principal Financial Group and its peers revenue, earnings per share (EPS) and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
Principal Financial Group $12.56 billion $1.88 billion 10.80
Principal Financial Group Competitors $28.40 billion $2.34 billion 53.58

Principal Financial Group’s peers have higher revenue and earnings than Principal Financial Group. Principal Financial Group is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Institutional & Insider Ownership

68.3% of Principal Financial Group shares are owned by institutional investors. Comparatively, 68.4% of shares of all “Life & Health Insurance” companies are owned by institutional investors. 1.5% of Principal Financial Group shares are owned by insiders. Comparatively, 9.6% of shares of all “Life & Health Insurance” companies are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Volatility & Risk

Principal Financial Group has a beta of 1.67, meaning that its stock price is 67% more volatile than the S&P 500. Comparatively, Principal Financial Group’s peers have a beta of 1.29, meaning that their average stock price is 29% more volatile than the S&P 500.

Summary

Principal Financial Group peers beat Principal Financial Group on 10 of the 15 factors compared.

Principal Financial Group Company Profile

Principal Financial Group, Inc. is an investment management company. The Company offers a range of financial products and services, including retirement, asset management and insurance. Its segments include Retirement and Income Solutions; Principal Global Investors, Principal International; U.S. Insurance Solutions, and Corporate. The Company offers a portfolio of products and services for retirement savings and retirement income. The Company’s Principal Global Investors segment manages assets for investors around the world. The Company offers pension accumulation products and services, mutual funds, asset management, income annuities and life insurance accumulation products. The Company’s U.S. Insurance Solutions segment provides group and individual insurance solutions. It focuses on small and medium-sized businesses, providing a range of retirement and employee benefit solutions, and individual insurance solutions to meet the needs of the business owners and their employees.

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