LSE:0KO5

Stock Analysis Report

Principal Financial Group

Executive Summary

Principal Financial Group, Inc. provides retirement, asset management, and insurance products and services to businesses, individuals, and institutional clients worldwide.

Rewards

Trading at 63.5% below its fair value

Earnings are forecast to grow 9.4% per year

Pays a high and reliable dividend of 4.33%

Risk Analysis

No risks detected for 0KO5 from our risk checks.


Snowflake Analysis

Undervalued established dividend payer.


Similar Companies

Share Price & News

How has Principal Financial Group's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: 0KO5 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

6.3%

0KO5

-0.9%

GB Insurance

-0.5%

GB Market


1 Year Return

11.1%

0KO5

-1.6%

GB Insurance

6.0%

GB Market

Return vs Industry: 0KO5 exceeded the UK Insurance industry which returned -1.6% over the past year.

Return vs Market: 0KO5 exceeded the UK Market which returned 6% over the past year.


Shareholder returns

0KO5IndustryMarket
7 Day6.3%-0.9%-0.5%
30 Day7.8%2.2%-1.8%
90 Day9.0%8.0%2.4%
1 Year15.7%11.1%9.4%-1.6%11.5%6.0%
3 Yearn/a18.7%-2.5%18.2%3.5%
5 Yearn/a30.5%-2.9%34.3%3.5%

Price Volatility Vs. Market

How volatile is Principal Financial Group's share price compared to the market and industry in the last 5 years?


Simply Wall St News

No news available

Valuation

Is Principal Financial Group undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: 0KO5 ($59.18) is trading below our estimate of fair value ($162.05)

Significantly Below Fair Value: 0KO5 is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: 0KO5 is good value based on its PE Ratio (10.3x) compared to the Insurance industry average (14.6x).

PE vs Market: 0KO5 is good value based on its PE Ratio (10.3x) compared to the UK market (18.6x).


Price to Earnings Growth Ratio

PEG Ratio: 0KO5 is poor value based on its PEG Ratio (1.1x)


Price to Book Ratio

PB vs Industry: 0KO5 is good value based on its PB Ratio (1x) compared to the GB Insurance industry average (1.8x).


Next Steps

Future Growth

How is Principal Financial Group forecast to perform in the next 1 to 3 years based on estimates from 7 analysts?

9.4%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 0KO5's forecast earnings growth (9.4% per year) is above the savings rate (0.5%).

Earnings vs Market: 0KO5's earnings (9.4% per year) are forecast to grow slower than the UK market (13.1% per year).

High Growth Earnings: 0KO5's earnings are forecast to grow, but not significantly.

Revenue vs Market: 0KO5's revenue (7% per year) is forecast to grow faster than the UK market (3.8% per year).

High Growth Revenue: 0KO5's revenue (7% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: 0KO5's Return on Equity is forecast to be low in 3 years time (12.3%).


Next Steps

Past Performance

How has Principal Financial Group performed over the past 5 years?

9.3%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 0KO5 has high quality earnings.

Growing Profit Margin: 0KO5's current net profit margins (8.6%) are lower than last year (10.9%).


Past Earnings Growth Analysis

Earnings Trend: 0KO5's earnings have grown by 9.3% per year over the past 5 years.

Accelerating Growth: 0KO5's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: 0KO5 had negative earnings growth (-9.8%) over the past year, making it difficult to compare to the Insurance industry average (23.4%).


Return on Equity

High ROE: 0KO5's Return on Equity (9.7%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Principal Financial Group's financial position? (This company is analysed differently as a bank or financial institution)


Financial Position Analysis


Debt to Equity History and Analysis


Balance Sheet

Inventory Level: 0KO5 has a low level of unsold assets or inventory.

Debt Coverage by Assets: 0KO5's debt is covered by short term assets (assets are 1.8x debt).


Financial Institutions Analysis

Asset Level: 0KO5's level of assets compared to its equity is moderate.

Allowance for Bad Loans: Insufficient data to determine if 0KO5 has a sufficient allowance for bad loans.

Low Risk Liabilities: 0KO5 reports no customer deposits, loans are made up entirely of externally borrowed funds.

Loan Level: Insufficient data to determine if 0KO5 has an acceptable proportion of non-loan assets held.

Low Risk Deposits: 0KO5 has advanced significantly more loans than the customer deposits it holds.

Level of Bad Loans: Insufficient data to determine if 0KO5 has an appropriate level of bad loans.


Next Steps

Dividend

What is Principal Financial Group's current dividend yield, its reliability and sustainability?

4.33%

Current Dividend Yield


Upcoming Dividend Payment

Purchase Principal Financial Group before the 'Buy Limit' to receive their next dividend payment.


Dividend Yield vs Market

company4.3%marketbottom25%1.8%markettop25%5.0%industryaverage4.8%forecastin3Years4.6%

Current dividend yield vs market & industry

Notable Dividend: 0KO5's dividend (4.33%) is higher than the bottom 25% of dividend payers in the UK market (1.8%).

High Dividend: 0KO5's dividend (4.33%) is low compared to the top 25% of dividend payers in the UK market (5.03%).


Stability and Growth of Payments

Stable Dividend: 0KO5's dividends per share have been stable in the past 10 years.

Growing Dividend: 0KO5's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (43.6%), 0KO5's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: 0KO5's dividends in 3 years are forecast to be well covered by earnings (38% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

3.8yrs

Average management tenure


CEO

Dan Houston (57yo)

4.5yrs

Tenure

US$12,227,017

Compensation

Mr. Daniel Joseph Houston, also known as Dan, has been Chairman of the Board at Greater Des Moines Partnership since January 2018. He has been the Chief Executive Officer of Principal Financial Group, Inc. ...


CEO Compensation Analysis

Compensation vs Market: Dan's total compensation ($USD12.23M) is above average for companies of similar size in the UK market ($USD4.67M).

Compensation vs Earnings: Dan's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Daniel Houston
Chairman4.5yrsUS$12.23m0.064% $9.6m
Deanna Strable-Soethout
Executive VP & CFO3yrsUS$3.45m0.045% $6.7m
Timothy Dunbar
President of Principal Global Asset Management Business1.4yrsUS$2.56m0.023% $3.4m
Luis Valdés
President & CEO of Principal International8.9yrsUS$2.86m0.022% $3.2m
Patrick Halter
Chief Executive Officer of Principal Global Investors1.4yrsUS$3.68m0.029% $4.3m
Gary Scholten
Executive VP18.1yrsno data0.030% $4.5m
John Egan
Vice President of Investor Relations9.8yrsno datano data
Karen Shaff
Executive VP18.8yrsno data0.036% $5.3m
Elizabeth Happe
Senior VP & Chief Compliance Officer1.1yrsno datano data
Beth Wood
Senior VP & Chief Marketing Officer0.6yrsno datano data

3.8yrs

Average Tenure

60yo

Average Age

Experienced Management: 0KO5's management team is considered experienced (3.8 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Daniel Houston
Chairman4.5yrsUS$12.23m0.064% $9.6m
Sandra Helton
Independent Director18.8yrsUS$284.95k0.00040% $59.8k
Betsy Bernard
Independent Director19yrsUS$282.45k0.00049% $73.2k
Michael Dan
Independent Director13.8yrsUS$269.95k0.0036% $544.0k
Elizabeth Tallett
Independent Director18.8yrsUS$289.95k0.00096% $143.5k
Roger Hochschild
Independent Director4.9yrsUS$267.45kno data
Jocelyn Carter-Miller
Independent Director18.8yrsUS$284.95k0.00010% $14.9k
Charles Gelatt
Independent Director18.8yrsUS$264.95k0.053% $7.9m
Scott Mills
Lead Director0yrsUS$284.95kno data
Blair Pickerell
Independent Director4.5yrsUS$264.95kno data

18.8yrs

Average Tenure

63.5yo

Average Age

Experienced Board: 0KO5's board of directors are seasoned and experienced ( 18.8 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Principal Financial Group, Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Principal Financial Group, Inc.
  • Ticker: 0KO5
  • Exchange: LSE
  • Founded: 1879
  • Industry: Life and Health Insurance
  • Sector: Insurance
  • Market Cap: US$14.946b
  • Shares outstanding: 274.69m
  • Website: https://www.principal.com

Number of Employees


Location

  • Principal Financial Group, Inc.
  • 711 High Street
  • Des Moines
  • Iowa
  • 50392
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
PFGNasdaqGS (Nasdaq Global Select)YesCommon StockUSUSDOct 2001
PG4DB (Deutsche Boerse AG)YesCommon StockDEEUROct 2001
0KO5LSE (London Stock Exchange)YesCommon StockGBUSDOct 2001
P1FG34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH 1 REPR 1 COMBRBRLJan 2020

Biography

Principal Financial Group, Inc. provides retirement, asset management, and insurance products and services to businesses, individuals, and institutional clients worldwide. The company operates through Retirement and Income Solutions, Principal Global Investors, Principal International, and U.S. Insurance Solutions segments. The Retirement and Income Solutions segment provides a portfolio of asset accumulation products and services for retirement savings and income. It offers products and services for defined contribution plans, including 401(k) and 403(b) plans, defined benefit pension plans, nonqualified executive benefit plans, employee stock ownership plans, and pension risk transfer services; individual retirement accounts and payroll deduction plans; investment only products; and mutual funds, individual annuities, and bank products. The Principal Global Investors segment provides equity, fixed income, real estate, and other alternative investments, as well as asset allocation, stable value management, and other structured investment strategies. The Principal International segment offers pension accumulation and income annuity products, mutual funds, asset management, and life insurance accumulation products, as well as voluntary savings plans in Brazil, Chile, Mexico, China, Hong Kong Special Administrative Region, India, and Southeast Asia. The U.S. Insurance Solutions segment provides specialty benefits, such as group dental and vision insurance, group life insurance, and group and individual disability insurance, as well as administers group dental, disability, and vision benefits; and individual life insurance products comprising universal, variable universal, indexed universal, and term life insurance products in the United States. It also offers insurance solutions for small and medium-sized businesses and their owners, as well as executives. Principal Financial Group, Inc. was founded in 1879 and is based in Des Moines, Iowa. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/24 23:17
End of Day Share Price2020/02/18 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.