Principal Financial Group, Inc. (NYSE:PFG) reported first-quarter 2016 operating net income of 97 cents per share that missed the Zacks Consensus Estimate by 2%. Earnings also declined 11% year over year.
Nonetheless, the company’s investment performance remained strong and it also displayed a balanced approach to capital management.
Including net realized capital gains of 28 cents, net income available to common stockholders was $1.25 per share, down 10.1% year over year.
Behind the Headlines
Operating revenues in the quarter increased 14.8% year over year to $2.9 billion. Revenues beat the Zacks Consensus Estimate of $2.7 billion by 7.7%.
Total expenses were $2.6 billion, up 20.8% as benefits, claims and settlement expenses, depreciation and amortization and interest expenses on corporate debt increased.
Principal Financial’s Asset Under Management (AUM) as of Mar 31, 2016 was a record $547.7 billion, up 3.8% from Dec 31, 2015.
Book value per share as of Mar 31, 2016 was $34.58, up 8.2% year over year.
Segment Update
Retirement and Investor Services: Revenues soared 30.2% year over year to $1.5 billion.
Operating earnings decreased 10.6% year over year to $181.4 million.
Principal Global Investors: Revenues of $269.7 million dipped 4.9% from the prior-year quarter due to lower performance and transaction fees.
Operating earnings decreased 13.9% year over year to $79.7 million owing to decline in adjusted revenues.
Principal International: Revenues were $184.7 million in the quarter, down 3.3% year over year.
Operating earnings decreased 15.8% year over year to $68.0 million due to unfavorable foreign exchange rates.
US Insurance Solution: Revenues were $890.9 million, up 3.4% year over year.
Operating income was $80.5 million, down 1.7% year over year.
Corporate: Revenues were ($13.1) million compared with ($9.0) million in the year-ago quarter.
Operating loss of $53.3 million was wider than a loss of $37.3 million in the year-ago quarter.
Dividend and Share Repurchase Update
Principal Financial paid a quarterly dividend of 38 cents per share on Mar 25, 2016. In addition, the board of directors of Principal Financial declared a second-quarter dividend of 39 cents. This reflects an 8% increase from the prior-year period.
Also, the company bought back 2.3 million shares during the reported quarter and completed the remainder of its 2015 authorization. In February, an additional $400 million buyback program was authorized and the company now has $389 million remaining under the authorization.
Principal Financial displayed a strong capital position with full-year capital deployment target ranging between $800 million and $1.0 billion.
Zacks Rank and Performance of Other Stocks
Principal Financial presently carries a Zacks Rank #2 (Buy). Among the other players from the finance sector that have reported their first-quarter earnings so far, the bottom line at RLI Corp. (NYSE:RLI) and First American Financial Corp. (NYSE:FAF) beat their respective Zacks Consensus Estimate, Progressive Corp. (NYSE:PGR) missed the same in the first quarter.
PRINCIPAL FINL (PFG): Free Stock Analysis Report
RLI CORP (RLI): Free Stock Analysis Report
PROGRESSIVE COR (PGR): Free Stock Analysis Report
FIRST AMER FINL (FAF): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research