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Des Moines, Iowa-based Principal Financial Group, Inc. (PFG) is a leading global financial services company specializing in retirement, insurance, and asset management solutions. With a market cap of $18.8 billion, PFG serves millions of customers worldwide, offering innovative products to help individuals and businesses achieve financial security.
Companies worth $10 billion or more are generally categorized as "large-cap stocks," and Principal fits this description perfectly. Its valuation reflects its strong presence in the financial sector, driven by its commitment to delivering comprehensive solutions and fostering long-term growth.
PFG touched its two-year high of $91.97 on Oct. 17, 2024, and is currently trading 7.3% below that peak. Meanwhile, PFG has soared 9.6% over the past three months, outperforming the Financial Select Sector SPDR Fund’s (XLF) 2.4% gains during the same time frame.
However, PFG has notably underperformed the financial sector over the longer term. PFG stock dipped 5 bps over the past six months and gained 2.1% over the past 52 weeks, lagging behind XLF’s 11.3% gains over the past six months and 21.1% surge over the past year.
To confirm the recent upturn, PFG has observed a notable surge in stock prices since late December 2024 and traded mostly above its 50-day and 200-day moving averages since mid-January with some notable fluctuations.
Principal Financial Group’s stock prices rose 2.9% in the trading session after the release of its mixed Q4 results on Feb. 6. Driven by the positive change in the fair value of funds withheld embedded derivative, the company’s total revenues for the quarter surged 76.6% year-over-year to approximately $4.8 billion, exceeding the Street’s estimates by a notable margin. However, its adjusted operating income per share increased by a modest 6% year-over-year to $1.94, missing the consensus estimates by 51 bps.
Meanwhile, although the company has observed notable AUM inflows in recent quarters, it has also experienced significant outflows, leading to a net outflow in AUM over the past five quarters. Still, the company reported growth in AUM driven by solid performance of the securities market, however, due to the recent downturn in equities, the company’s AUM as of December 2024 dropped 3.8% quarter-on-quarter to $712.1 million.
On a brighter note, Principal Financial has outpaced its peer T. Rowe Price Group, Inc.’s (TROW) 12.3% decline over the past six months and a 19.1% drop over the past year.
Nevertheless, analysts remain cautious about the stock’s prospects. Among the 16 analysts covering the PFG stock, the consensus rating is a “Hold.” Its mean price target of $86.67 represents a modest 1.7% premium to current price levels.
