We expect investment manager Principal Financial Group Inc. (PFG) to beat expectations when it reports third-quarter 2014 results on Oct 23 after the market closes.
Why a Likely Positive Surprise?
Our proven model shows that Principal Financial is likely to beat earnings because it has the right combination of two key ingredients.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is at +0.94%. This is a meaningful and leading indicator of a likely positive earnings surprise for the company.
Zacks Rank: Principal Financial carries a Zacks Rank #3 (Hold). Note that stocks with Zacks Ranks of #1, 2 and 3 have a significantly higher chance of beating earnings.
The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
What is Driving the Better-Than-Expected Earnings?
Principal Financial’s heightened focus on fee-based revenue sources will continue to drive solid results.
In addition, Principal Financial continues to focus on strategic opportunities to strengthen its asset accumulation and asset management businesses. Asset under management has been showing steady improvement and retain the momentum in the to-be reported quarter.
Continued share buyback resulting in lower share count, will a further give a boost to the bottom line.
The positive trend is evident in the trailing four-quarter average earnings beat of 7.21%
Other Stocks to Consider
Here are some other companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:
Endurance Specialty Holdings Ltd. (ENH), Earnings ESP of +3.95% and a Zacks Rank #1 (Strong Buy).
The Allstate Corporation (ALL), Earnings ESP of +2.21% and a Zacks Rank #2 (Buy).
Arch Capital Group Ltd. (ACGL), Earnings ESP of +2.08% and a Zacks Rank #2
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