Principal Financial Group, Inc. (PFG) announced that its board of directors has authorized a buyback of $200 million of common stock.
The new authorization is part of the company’s strategy to deploy up to $400 million of capital for acquisitions or share buybacks in the second half of 2011, taking its full year 2011 capital reserved for these purposes to $1 billion.
Earlier, in May 2011, the board of directors had authorized a buyback of $250 million of common stock, which the company utilized to repurchase 8.4 million shares at an average price of $29.76 per share.
The company boasts of a strong financial position. Cash and cash equivalents of the company as of June 30, 2011, were $2.17 billion, while cash flow from operation in the first half of the year was $1.78 billion, which the company can leverage for shareholder-friendly moves.
We believe besides share repurchases, Principal Financial Group's consistent dividend payouts enhance shareholder wealth. The company has been consistently paying yearly dividends to its shareholders and has increased the annual dividend rate by 5 cents in each of the preceding two financial years. In the last financial year the company paid an annual dividend of 55 cents to its shareholders.
Principal Financial Group reported strong results of 73 cents per share in the recently concluded quarter, comfortably surpassing our expectation and the year-ago results. The Zacks Consensus Estimates for third quarter 2011, fiscal year 2011 and fiscal year 2012 are currently pegged at 76 cents, $2.98 and $3.40 per share, respectively.
Principal Financial Group presently retains a Zacks #3 Rank, which translates to a short-term Hold rating. The company’s competitor Lincoln National Corporation (LNC) also has a Zacks #3 Rank.
Based in Des Moines, Iowa, Principal Financial Group Inc. provides an expansive range of retirement savings, investment and insurance products and services through its various subsidiaries.
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