Principal Financial Group, Inc. (GFP – Free Report) is expected to release its fourth quarter 2021 results on February 7, after market close. The company made a surprise profit of 6.29% in the last reported quarter.
Factors at play
Principal Financial’s fourth quarter results are expected to reflect the benefits of higher average invested assets, higher management fee income and strong investment performance.
Premiums in the Retirement and Income Solutions segment were likely weighed down by lower sales of the single premium group and individual annuities with life contingencies.
Investment income is expected to have benefited from higher variable investment income, growth in average invested assets, favorable U.S. market performance in certain alternative investments and increased bond prepayments, and higher inflation-based investment returns on average invested assets and cash in Latin America.
Growth in the Specialty Benefits insurance business, higher single premium annuity sales in Chile, higher management fee income and higher commissions resulting from higher average account values likely benefited revenue growth in the quarter to be reported. The increase was likely partially offset by lower sales of single premium group annuities and individual annuities with life contingencies.
Zacks’ consensus estimate for fourth-quarter 2021 revenue is pegged at $3.7 billion, indicating a 2.2% increase from the figure reported a year ago.
Assets under management likely benefited from higher free cash flow, strong investment performance and the migration of pension assets from institutions and trusts.
Expenses likely declined due to lower benefits, claims and adjustment expenses, and policyholder dividends.
Operating expenses are likely to have increased due to an increase in CED amortization, an increase in variable compensation expense and an increase in variable expense related to the increase in assets under management.
Continued share buybacks likely provided an additional benefit to bottom line.
Zacks’ consensus estimate for fourth-quarter 2021 earnings is $1.63 per share, indicating a 10.1% increase from the figure reported a year ago.
What our quantitative model predicts
Our proven model does not conclusively predict an earnings beat for Principal Financial this time around. This is because a stock must have the right combination of a positive earnings ESP and a Zacks rank of #1 (strong buy), 2 (buy) or 3 (hold), which is not the case here. .
ESP Earnings: Principal Financial has an ESP on earnings of 0.00%. Indeed, the most accurate estimate and Zacks consensus estimate are pegged at $1.63. You can discover the best stocks to buy or sell before they’re flagged with our earnings ESP filter.
Zacks Rank: Principal Financial currently carries a Zacks #1 Rank stock. You can see the full list of today’s Zacks #1 Rank stocks here.
Actions to consider
Some financial sector stocks with the right combination of elements to beat estimates this time around are:
Franklin Resources (Well – Free Report) has an earnings ESP of +0.58% and a Zacks rank of 3. The Zacks consensus estimate for Franklin Resources earnings in 2022 has moved north 1.6% during of the last 30 days. BEN’s expected long-term earnings growth rate is set at 3.6%.
The Zacks consensus estimate for Franklin Resources earnings in 2022 implies a 6.7% year-over-year increase. BEN’s earnings have exceeded estimates in each of the past four quarters, averaging 25.58%.
Management of Ares (ARES – Free Report) has an ESP on Earnings of +0.23% and a Zacks Rank #3. The Zacks consensus estimate for Ares Management’s earnings in 2022 has moved 1.9% north over the past 30 days. ARES’ expected long-term earnings growth rate is set at 29.7%, above the industry average of 16.5%.
Zacks’ consensus estimate for Ares Management’s earnings in 2022 implies a 30.7% year-over-year increase. ARES earnings beat estimates in two of the past four quarters and missed the other two, averaging 8.77%.
Hamilton Lane (HLNE – Free Report) has a +1.95% Earnings ESP and Zacks Rank #2. The Zacks consensus estimate for Hamilton Lane revenue in 2022 has moved north 3.3% in the past 30 days.
Zacks consensus estimate for Hamilton Lane revenue in 2022 implies a 43.9% year-over-year increase. HLNE earnings have exceeded estimates in each of the past four quarters, averaging 31%.
Stay on top of upcoming earnings announcements with Zacks Earnings Calendar.
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