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Valued at $20.1 billion by market cap, Principal Financial Group, Inc. (PFG) operates in the financial services sector. The Des Moines, IA-based company provides a diverse range of retirement, asset management, and insurance products for businesses, individuals, and institutional clients globally.
Companies valued at $10 billion or more are generally considered “large-cap” stocks and Principal Financial fits this criterion perfectly. Principal Financial is renowned for its comprehensive suite of retirement solutions and its strategic focus on small and medium-sized businesses, distinguishing it in the competitive financial services landscape.
However, the financial services company has declined 3% from its 52-week high of $81.24, achieved in July. Shares of PFG are up 6.7% over the past three months, outperforming the broader Nasdaq Composite's ($NASX) 1.3% gains over the same time frame.
Nevertheless, longer term, PFG is up 8.8% on a YTD basis, lagging behind NASX's 19.6% gains. Moreover, shares of Principal Financial have returned 11.1% over the past 52 weeks, compared to NASX's 33.3% gains over the same time frame.
Yet, PFG has been trading above both its 50-day and 200-day moving averages since early September.
Principal Financial has underperformed over the past year primarily due to net outflows in its asset management business and disappointing returns amid increasing competition from passive investing trends. Additionally, weaker performance in its commercial real estate exposure has raised concerns about potential downside risks to earnings. Moreover, despite reporting better-than-expected Q2 adjusted revenue of $4.1 billion on Jul. 25, the stock fell 3.4% the next day due to disappointing adjusted EPS of $1.63, which missed Wall Street's projections.
To emphasize PFG’s underperformance, the stock’s rival American Financial Group, Inc. (AFG) has outperformed PFG, with a 14.1% rally on a YTD basis and an 18.5% surge over the past 52 weeks.
As the stock underperformed over the past year, analysts remain cautious about its prospects. Among the 14 analysts covering the stock, there is a consensus rating of “Hold,” and it is currently trading slightly below the mean price target of $85.75.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
