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Principal Financial Stock Lags Industry: Should You Hold or Fold?

Shares of Principal Financial Group, Inc. (NASDAQ: PFG) have gained 0.8% in the past year, underperforming the industry's growth of 11% and the Zacks S&P 500 composite's rise of 14.4%.

PFG Lags Industry and S&P

Image Source: Zacks Investment Research

Earnings per share missed the consensus estimate in the last two reported quarters of 2024.

Closing at $79.30 on Tuesday, the stock stands almost 10.1% below its 52-week high of $88.26.

The Zacks Consensus Estimate for PFG's 2024 and 2025 earnings has moved 0.2% and 0.3% south, respectively, in the past 30 days.

Principal Financial's expenses have been increasing since 2013 due to a rise in benefits, claims and settlement expenses, as well as operating expenses. An increase in expenses weighs on its margins. Net margin contracted 280 basis points to 8.1% in the second quarter of 2024.

Factors Benefiting PFG Stock

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.

The Principal International segment is likely to benefit from higher single-premium annuity sales in Chile. The segment's operating earnings should gain from foreign currency tailwinds.

The Specialty Benefits Insurance business should continue to gain from record sales, strong retention and employment growth. Growth in the business, favorable ...