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Uncovering Key Insights on Principal Financial

Principal Financial shares fell by -3.4% during the day's morning session, and are now trading at a price of $81.53. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.

an Increase in Expected Earnings Improves Its Value Outlook but Trading Above Its Fair Price:

Principal Financial Group, Inc. provides retirement, asset management, and insurance products and services to businesses, individuals, and institutional clients worldwide. The company belongs to the Finance sector, which has an average price to earnings (P/E) ratio of 19.48 and an average price to book (P/B) ratio of 1.85. In contrast, Principal Financial has a trailing 12 month P/E ratio of 15.2 and a P/B ratio of 1.72.

When we dividePrincipal Financial's P/E ratio by its expected five-year EPS growth rate, we obtain a PEG ratio of 0.93, which indicates that the market is undervaluing the company's projected growth (a PEG ratio of 1 indicates a fairly valued company). Your analysis of the stock shouldn't end here. Rather, a good PEG ratio should alert you that it may be worthwhile to take a closer look at the stock.

The Company's Revenues Are Declining:

2018 2019 2020 2021 2022 2023
Revenue (M) $14,237 $16,222 $14,742 $14,428 $17,536 $13,666
Interest Income (M) $150 $158 $163 $166 $176 $171
Net Margins 11% 9% 9% 11% 27% 5%
Net Income (M) $1,546 $1,394 $1,396 $1,580 $4,757 $623
Depreciation & Amort. (M) $151 $227 $252 $275 $296 $273
Diluted Shares (M) 289 281 277 273 255 245
Earnings Per Share $5.36 $4.96 $5.05 $5.79 $18.63 $2.55
EPS Growth n/a -7.46% 1.81% 14.65% 221.76% -86.31%
Avg. Price $46.52 $45.84 $38.3 $59.12 $68.09 $81.53
P/E Ratio 8.6 9.17 7.54 10.07 3.6 31.6
Free Cash Flow (M) $5,064 $5,361 $3,600 $3,124 $3,057 $3,690
CAPEX (M) $92 $132 $109 $130 $116 $102
Total Debt (M) $3,302 $3,828 $4,364 $4,360 $4,078 $3,992
Current Ratio 69.41 26.94 33.65 29.22 60.07 77.05

Principal Financial has declining revenues and a flat capital expenditure trend, declining EPS growth, and positive cash flows. On the other hand, the company has an excellent current ratio of 77.05 working in its favor.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.

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