Principal Financial (PFG) Q3 Earnings Miss, Dividend Up

Principal Financial Group, Inc.’s (NYSE:PFG) third-quarter 2017 operating net income of $1.28 per share missed the Zacks Consensus Estimate by 0.8%. However, the bottom line improved 11.3% year over year.

The company’s investment performance and net cash flows remained strong. Growth in operating earnings across all businesses was above market average. The company also displayed a balanced approach to capital management.

Including net realized capital gains of $1.48 per share, net income came in at $2.76 per share and more than doubled year over year.

Behind the Headlines

Operating revenues rallied 39.3% year over year to $3.9 billion. This improvement was driven by higher premiums and other considerations besides fees and other revenues.

Total expenses climbed 41.8% year over year to $3.5 billion, primarily due to increase in benefits, claims and settlement expense.

Principal Financial’s Asset Under Management (AUM) as of Sep 30, 2017 was a record $655.5 billion, up 10% year over year.

As of Sep 30, 2017, book value per share (excluding AOCI other than foreign currency translation adjustment) was $38.14, up 11.9% year over year.

Segment Update

Retirement and Income Solution: Revenues nearly doubled year over year to about $2.4 billion.

Operating earnings improved 1.5% year over year to $210.1 million.

Principal Global Investors: Revenues of $367.5 million improved nearly 6.2% from the prior-year quarter.

Operating earnings increased 15.3% year over year to $130.2 million.

Principal International: Revenues declined 17.8% year over year to $274.7 million in the quarter.

Operating earnings improved 11.9% year over year to $79.2 million.

U.S. Insurance Solution: Revenues increased 8.2% year over year to $985.5 million.

Operating earnings of $83.2 million were up 18.5% year over year.

Corporate: Revenues of ($20.3) million compared favorably with ($21) million in the year-ago quarter.

Operating loss of $43 million was narrower than a loss of $57.8 million in the year-ago quarter.

Dividend and Share Repurchase Update

The company paid $135.8 million in dividends and deployed $48.6 million to buy back 0.6 million shares in the third quarter. Total capital utilized was $190.5 million.

The board of directors of Principal Financial announced a dividend of 49 cents per share for the fourth quarter, a 4.2% increase over prior payout. This marks the seventh straight quarterly increase.

Principal Financial targets 2017 capital deployment of $800 million to $1.1 billion.

Zacks Rank

Principal Financial presently 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

Last quarter, the bottom lines at both Ameriprise Financial, Inc. (NYSE:AMP) and Legg Mason, Inc. (NYSE:LM) beat the respective Zacks Consensus Estimate, while that of AllianceBernstein Holding L.P. (NYSE:AB) missed the consensus mark.

Wall Street’s Next Amazon (NASDAQ:AMZN)

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.

Click for details >>