Shares of Principal Financial Group, Inc. PFG are trading at a price-to-book value of 1.88X, lower than the industry average of 2.52X, the Finance sector’s 4.37X and the Zacks S&P 500 Composite’s 8.18X. Its pricing, at a discount to the industry average, provides a better entry point to investors. The stock has a Value Score of A. This style score helps find the most attractive value stocks.
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Some of its peers include CNO Financial Group, Inc. CNO, MetLife, Inc. MET and Radian Group Inc. RDN, which are trading at a price-to-book value of 1.73X, 1.94X and 0.97X, respectively, in the past year.
With a market capitalization of $22.36 billion, the average number of shares traded in the last three months was 1.4 million.
PFG’s Price Performance
Principal Financial shares have gained 31.6% in the past year against the industry’s decline of 0.3%.
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PFG’s Encouraging Growth Projection
The Zacks Consensus Estimate for Principal Financial’s 2026 earnings per share (EPS) indicates a year-over-year increase of 13.2%. The consensus estimate for revenues is pegged at $16.35 billion, implying a year-over-year improvement of 1.8%.
The consensus estimate for 2027 EPS and revenues indicates an increase of 9.4% and 6.7%, respectively, from the corresponding 2026 estimates.
The expected long-term earnings growth is pegged at 11.3%.
PFG’s Key Tailwinds
Principal Financial’s revenue growth is expected to improve in the long run, driven by higher premiums and other considerations, fees and other revenues, and improved net investment income across its segments.
Principal Financial continues to benefit from its strength and leadership in retirement and long-term savings, group benefits and protection in the United States, retirement and long-term savings in Latin America and Asia, plus global asset management. These strengths help it deliver solid operating earnings.
Continued growth in fee, spread and risk businesses boosts the company’s long-term prospects. The company continues to leverage a favorable market position in the retirement industry and remains optimistic about the momentum across retirement platforms. PFG estimates solid revenue growth and margin expansion across all its segments over the long term.
The Specialty Benefits Insurance business should continue to gain from record sales, strong retention and employment growth. Favorable claims, business growth and disciplined expense management should benefit its pre-tax operating earnings.
Principal Financial’s assets under management (AUM) are driven by solid results across its three asset management and asset accumulation segments. Total company-managed AUM was $770 billion at the end of first-quarter 2026, increasing 7% year over year. Principal Financial’s extensive distribution footprint, strategic buyouts and operational discipline should enhance AUM growth.
Management utilizes a significant portion of its operating earnings for mergers and acquisitions and intends to continue doing so. Acquisitions, such as MetLife's Afore business, Internos and RobustWealth, have helped the company expand its fee-based businesses and global footprint. Integration of Wells Fargo Institutional Retirement and Trust business, along with strategic investment and initiatives, has expanded Principal Financial’s retirement offerings. Principal Financial looks forward to further leveraging the relationship to capitalize on its global retirement and asset management expertise through the partnership.
PFG boasts a strong capital position, with sufficient cash generation capabilities and liquidity. The company ended the first quarter of 2026 in a strong position, with $1.45 billion of excess and available capital. For 2026, PFG remains well-positioned to deliver on its enterprise long-term financial targets, with 9-12% growth in EPS and 75% to 85% free capital flow conversion.
Risks for PFG
PFG’s expenses have been increasing due to a rise in benefits, claims and settlement expenses, as well as operating expenses, weighing on margin expansion.
Principal Financial has been growing inorganically through acquisitions, which increases its debt obligation risks associated with successful integration.
Final Take on PFG
Principal Financial should benefit from fee-based revenue sources, improving assets under management, strategic buyouts, strong retention and effective capital deployment. However, escalating costs and dilution from acquisitions are concerns.
The board of directors raised the second-quarter dividend by 8% to 82 cents per share in April 2026 and targets a 40% dividend payout ratio. It also boasts a solid dividend yield of 3.1%, higher than the industry average of 2.6%.
Coupled with the impressive dividend history, attractive valuations, and solid growth projections, PFG should continue to benefit over the long term. The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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CNO Financial Group, Inc. (CNO): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).