On Aug 12, we issued an updated research report on Principal Financial Group Inc. (NYSE:PFG) .
Principal Financial’s second-quarter 2016 earnings outperformed the Zacks Consensus Estimate by 8.5% and also grew year over year. The company’s investment performance remained strong and it also displayed a balanced approach to capital management.
Principal Financial’s focus on fee-based revenue sources has been helping it to earn steadily as well as limiting exposure to the interest rate environment.
The company’s Asset Under Management (AUM) has been increasing steadily on improved results at three asset management and asset accumulation segments. In the second quarter, the company reported a record AUM of $527.7 billion, up 6.1% from the year-ago quarter. Principal Financial envisions AUM worth $1 trillion over the next five to seven years on the strength of various growth drivers and leadership position.
Moreover, the investment manager’s capital deployment through share buybacks and dividend payment is impressive and makes it an attractive pick for yield-seeking investors. While Principal Financial deployed $255 million of capital in the second quarter, the company utilized another $38 million to increase of its ownership in existing Principal Global Investor boutiques. Principal Financial anticipates capital deployment of about $0.8 billion to $1 billion in 2016 via quarterly dividends, strategic acquisitions and share buybacks.
Principal Financial exhausted the 2015 share repurchase authorization riding on its capital strength and has $285 million remaining from Feb 2016 authorization.
However, the company has been experiencing mounting debt levels and high leverage ratios. A high debt level leads to higher interest payment. Principal Financial should strive to service its debt uninterruptedly to maintain its credit worthiness.
The Zacks Consensus Estimate has been witnessing upward revisions for 2016 and 2017 over the last 30 days. While estimates for 2016 rose 2.8% to $4.38 per share and those for 2017 inched up 1.9% to $4.71.
Some notable investment managers to be considered are Apollo Global Management, LLC (NYSE:APO) , Eaton Vance Corp. (NYSE:EV) and Federated Investors, Inc. (NYSE:FII) .
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>
FEDERATED INVST (FII): Free Stock Analysis Report
EATON VANCE (EV): Free Stock Analysis Report
PRINCIPAL FINL (PFG): Free Stock Analysis Report
APOLLO GLOBAL-A (APO): Free Stock Analysis Report
Original post