Principal Financial Group (PFG): Assessing Valuation Following Strong Q3 Results and Ninth Consecutive Dividend Increase

Principal Financial Group (PFG) just posted its third quarter results, showing healthy growth across its core businesses. The company also boosted its common stock dividend for the ninth straight quarter and returned $400 million to shareholders.

See our latest analysis for Principal Financial Group.

Momentum has picked up noticeably for Principal Financial Group in recent months, with a 10.75% 90-day share price return and robust capital returns through its buyback and dividend hike. While the one-year total shareholder return stands at 6.1%, the stock's long-term record remains impressive, posting a 144% total shareholder return over five years, which suggests solid compounding for those who held steady.

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With shares trading near all-time highs after years of outperformance, the big question now is whether Principal Financial Group is undervalued as a steady compounder, or if the market has already accounted for its future growth prospects.

Most Popular Narrative: 4.3% Undervalued

With Principal Financial Group recently closing at $84.04, the most widely followed narrative pegs its fair value around $87.83 using a discount rate of 6.78%. That small gap has drawn attention, especially given the company's updated profit outlook and disciplined cost strategy.

"Principal Financial Group is positioning itself to capitalize on growth opportunities in the retirement ecosystem, focusing on SMBs and Global Asset Management. This strategy could drive future revenue growth as these markets expand."

Read the complete narrative.

Curious how a bold expansion into retirement markets, shifting profit margins, and a tightening of financial discipline might shift the company's entire growth story? Under the hood, the numbers reveal an aggressive transformation. See how projected future earnings and a surprising shift in profitability expectations are driving this valuation.

Result: Fair Value of $87.83 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing market volatility and shifting client behaviors could pressure revenue growth and margins, raising questions about how sustainable these gains really are.

Find out about the key risks to this Principal Financial Group narrative.

Build Your Own Principal Financial Group Narrative

Your perspective matters. If the prevailing take does not quite resonate or you want to dig deeper into the numbers on your own, you're free to build your own narrative in just a few minutes. Do it your way

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Principal Financial Group.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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