Principal Financial (PFG): What's Up This Earnings Season?

Principal Financial Group Inc. (NYSE:PFG) is set to report third-quarter 2016 results on Oct 27, after the market closes. Last quarter, the company posted a positive earnings surprise of 8.49%. Let’s see how things are shaping up for this announcement.

Factors to be Considered this Quarter

We expect Principal Financial to report operating earnings growth in the third quarter on the back of its diversified and integrated business model. Also, continued share buyback should aid the bottom line.

In addition, the company is likely to witness a rise in operating earnings at Principal Global Investors and US Insurance Solution in the third quarter.

Moreover, the company is expected to experience an increase in Asset Under Management (AUM) in the to-be-reported quarter, primarily due to better results at three asset management and asset accumulation segments.

However, a soft interest rate environment has likely weighed on the company’s investment results.

With respect to the surprise trend, the company delivered positive surprise in one of the last four quarters, with an average beat of 0.67%.

Earnings Whispers

Our proven model does not conclusively show that Principal Financial is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks ESP: Principal Financial has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.12.

Zacks Rank: Principal Financial carries a Zacks Rank #2.

Please note that we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies from the same space that you may want to consider as these have the right combination of elements to post an earnings beat this quarter:

Oaktree Capital Group, LLC (NYSE:OAK) , which is slated to report third-quarter earnings on Oct 28, has an Earnings ESP of +1.47% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

OM Asset Management plc (NYSE:OMAM) has an Earnings ESP of +3.33% and a Zacks Rank #2. The company is slated to report third-quarter earnings on Nov 2.

Fortress Investment Group LLC (NYSE:FIG) has an Earnings ESP of +4.00% and a Zacks Rank #3. The company is set to report third-quarter earnings on Nov 3.

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