PFG Stock Outperforms Industry: What Should Investors Do Now?

Shares of Principal Financial Group, Inc. PFG have gained 2.4% in the past year against the industry’s decline of 9.9%.

Principal Financial has outperformed its peers, including CNO Financial Group, Inc. CNO, MetLife, Inc. MET and Radian Group Inc. RDN. Shares of RDN have gained 0.5%, while shares of CNO and MTG have lost 3.8% and 16.5%, respectively, in the past year.

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With a market capitalization of $19.27 billion, the average number of shares traded in the last three months was 1.7 million.

PFG Shares are Affordable

Principal Financial shares are trading at a price-to-book value of 1.64X, lower than the industry average of 2.09X, the Finance sector’s 3.99X and the Zacks S&P 500 Composite’s 7.68X. Its pricing, at a discount to the industry average, gives a better entry point to investors. The stock has a Value Score of A. This style score helps find the most attractive value stocks.

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PFG’s Encouraging Growth Projection

The Zacks Consensus Estimate for Principal Financial’s 2026 earnings per share indicates a year-over-year increase of 13.5%. The consensus estimate for revenues is pegged at $16.86 billion, implying a year-over-year improvement of 5%.

The consensus estimate for 2027 earnings per share and revenues indicates an increase of 9.3% and 4.7%, respectively, from the corresponding 2026 estimates.

Target Price Reflects PFG’s Potential Upside

Based on short-term price targets offered by 11 analysts, the Zacks average price target is $94.73 per share. The average indicates a potential 7.9% upside from the last closing price.

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PFG’s Key Tailwinds

Principal Financial’s revenue growth is expected to improve in the long run, riding on higher premiums and other considerations, fees and other revenues, and improved net investment income across its segments.

Principal Financial continues to benefit from its strength and leadership in retirement and long-term savings, group benefits and protection in the United States, retirement and long-term savings in Latin America and Asia, plus global asset management, which helps it deliver solid operating earnings.

PFG estimates solid revenue growth as well as margin expansion across all its segments over the long term.

The Specialty Benefits Insurance business should continue to gain from record sales, strong retention and employment growth. Favorable claims, growth in the business and disciplined expense management should benefit its pre-tax operating earnings.

Strong institutional flows across equities, real estate and specialty fixed income, highlighting the value of diversified distribution through its institutional, retail and retirement channels, are likely to drive positive net cash flow.

Principal Financial’s extensive distribution footprint, strategic buyouts and operational discipline should enhance the assets under management growth.

PFG boasts a strong capital position, with sufficient cash generation capabilities and liquidity. PFG ended the year in a strong position with $1.6 billion of excess and available capital. This includes $800 million at the holding company at the targeted level, $300 million in subsidiaries, and $480 million in excess of the targeted 375% risk-based capital ratio, which is 406% at year’s end.

PFG’s Wealth Distribution

Principal Financial’s wealth distribution through share buybacks and dividend payments looks impressive. The board declared a first-quarter 2026 dividend that represented a 7% increase from the first quarter of 2025. This continues to align with the targeted 40% dividend payout ratio and demonstrates confidence in continued growth. It also boasts a solid dividend yield of 3.7%, higher than the industry average of 2.5%.

PFG remains committed to returning excess capital to shareholders and targeting $1.5 billion to $1.8 billion of capital deployments in 2026. This includes $800 million to $1.1 billion of share repurchases and an increase in dividends, aligned with the targeted dividend payout ratio. It intends to spend 35-45% of net income in share buybacks and about 10% in strategic M&A activities to enhance capabilities and support organic growth.

Final Take on PFG

PFG's financial stability and favorable growth estimates bode well for growth. Principal Financial should benefit from strategic buyouts, strong retention, higher single premium annuity sales, effective capital deployment and positive net cash flow.

Coupled with the impressive dividend history, attractive valuations, solid growth projections and optimistic analyst sentiment, PFG should continue to benefit over the long term. The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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CNO Financial Group, Inc. (CNO): Free Stock Analysis Report

MetLife, Inc. (MET): Free Stock Analysis Report

Principal Financial Group, Inc. (PFG): Free Stock Analysis Report

Radian Group Inc. (RDN): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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