Principal Financial Group Inc. (PFG) is set to report fourth-quarter and full-year 2014 results on Jan 29. Last quarter, the company posted a 12.26% surprise. Let’s see how things are shaping up for this announcement.
Factors Influencing This Past Quarter
Principal Financial will continue to benefit from its fee-based revenue sources. Also, a fee-based business model limits exposure to the interest rate environment.
Principal Financial’s focus on strategic opportunities to strengthen its asset accumulation and asset management businesses, extensive distribution footprint, best-in-class solutions and operational discipline will increase asset under management which is already showing steady improvement. Its success story in emerging markets will be an added upside.
Continued share buyback resulting in a lower share count, will a give a further boost to the bottom line.
However, an increasing expense level might weigh on margin expansion. In addition, a soft interest rate environment might curtail investment income.
Earnings Whispers?
Our proven model does not conclusively show that Principal Financial is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Principal Financial has 0.00% Earnings ESP. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.04.
Zacks Rank: Principal Financial carries a Zacks Rank #3 (Hold). Though a Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies you may want to consider as these have the right combination of elements to post an earnings beat this quarter:
Arch Capital Group Ltd. (ACGL) Earnings ESP of +1.92% and a Zacks Rank #1 (Strong Buy).
The Allstate Corporation (ALL), Earnings ESP of +1.81% and a Zacks Rank #1.
The Chubb Corporation (CB), Earnings ESP of +1.39% and a Zacks Rank #1.
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