Principal Financial (PFG) Down 4.2% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Principal Financial (PFG). Shares have lost about 4.2% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Principal Financial due for a breakout? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent catalysts for Principal Financial Group, Inc. before we dive into how investors and analysts have reacted as of late.

Principal Financial Q4 Earnings Miss, Revenues & Premiums Rise Y/Y

Principal Financial Group, Inc.’s fourth-quarter 2025 operating net income of $2.19 per share missed the Zacks Consensus Estimate by 1.8%. The bottom line increased 13% year over year. Total revenues jumped 9.2% year over year to $4.4 billion due to increased premiums and other considerations, fees, and other revenues and net investment income. Principal Financial witnessed higher revenues across Retirement and Income Solution, Investment Management, Specialty Benefits, and Life Insurance segments, offset by higher expenses.

Behind the Headlines

Total expenses increased 8.2% year over year to $3.9 billion due to higher benefits, claims and settlement expenses and operating expenses. As of Dec. 31, 2025, Principal Financial’s assets under management amounted to $781 billion, which is included in the assets under administration of $1.8 trillion.

Segment Update

Retirement and Income Solution: Revenues increased 15.6% year over year to $2.5 billion because of higher premiums and other considerations, fees and other revenues, and net investment income. Pre-tax operating earnings increased 7% year over year to $299.5 million, primarily due to higher net revenues and disciplined expense management.

Investment Management: Revenues of $482.7 million were up 1.7% from the prior-year quarter due to higher fees and other revenues and net investment income. Pre-tax operating earnings increased 2% year over year to $166.7 million. The increase was primarily due to higher operating revenues less pass-through expenses. Operating margin remains unchanged year over year to 38.3%.

International Pension: Revenues decreased 9.6% year over year to $216.6 million, owing to lower premiums and other considerations, fees and other revenues, and net investment income. Pre-Tax operating earnings of $64.9 million increased 25% year over year. The increase was due to higher net revenues and disciplined expense management.

Specialty Benefits: Revenues increased 2.8% year over year to $898.2 million, owing to higher premiums and other considerations as well as net investment income. Pre-tax operating earnings of $142.1 million decreased 3% year over year. The decrease was primarily due to the favorable one-time model refinement impact in the fourth quarter of 2024.

Life Insurance: Revenues increased 5.1% year over year to $346.1 million, owing to higher premiums and other considerations, fees and other revenues, and net investment income. Pre-tax operating earnings of $27.5 million surged more than threefold year over year. The increase was driven by growth in the business, expense management discipline, and improved mortality experience.

Corporate: Pre-tax operating losses of $102.8 million were narrower than a loss of $103.9 million incurred a year ago.

Financial Update

As of Dec. 31, 2025, cash and cash equivalents were $4.4 billion, which increased 5.2% from 2024-end. At the fourth-quarter end, long-term debt was $3.9 billion, which declined 0.7% from 2024-end. As of Dec. 31, 2025, book value per share (excluding cumulative change in fair value of funds withheld embedded derivative and AOCI other than foreign currency translation adjustment) was $57.25, up 6.6% from 2024-end.

Dividend and Share Repurchase Update

Principal Financial returned $1.5 billion of capital to shareholders for 2025, including $0.9 billion of share repurchases and $0.7 billion of dividends. The board of directors raised the first-quarter dividend by 7% to 80 cents per share. The dividend will be payable on March 27, 2026, to shareholders of record as of March 11.

Full-Year Highlights

For 2025, Principal Financial reported an operating net income of $8.27 per share, which missed the Zacks Consensus Estimate by 0.3%. However, it increased 19% year over year. Total operating revenues of $15.93 billion increased 2% year over year.

2026 Guidance

Principal Financial expects 9-12% annual non-GAAP operating earnings per diluted share growth. PFG estimates 75-85% free capital flow conversion. It expects 15-17% non-GAAP return on equity. The insurer projects $1.5-$1.8 billion capital deployment, which includes $0.8-$1.1 billion of share repurchases and a 40% dividend ratio.

How Have Estimates Been Moving Since Then?

Since the earnings release, investors have witnessed a downward trend in estimates review.

VGM Scores

At this time, Principal Financial has a subpar Growth Score of D, a score with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for value investors.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Principal Financial has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

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

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

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