Principal Financial Jumps After Strong Earnings; Announcement of Preferred Dividend Plan

Jacob Harper |

Principal Financial Group, Inc. (PFG) saw their stock surge amid heavy trading after announcing on July 25 they would begin offering a “preferred dividend” to investors. Under the new plan, Series A stockholders will get $1.39 a share, while Series B stockholders will get $0.40 a share.

The dividend rate will apply to investors who are “preferred stockholders of record” on September 12, 2013, and the dividends will kick in starting September 30, or the end of the third quarter of 2013.

The company has been aggressive in tapping into emerging markets. The Iowa-based financial company recently made headway into two emerging markets. They were granted higher access to the Chinese equities market via the Qualified Foreign Institutional Investor program, a process which took them nearly 20 years to complete. Principal also recently bet big on Chile, buying Chile’s largest pension holder, AFP Cuprum S.A. in Feb. 2013 for $1.51 billion. Curprum contributed $26 million in earnings in its first full quarter as a Principal subsidiary.

While the company missed revenue estimates, their net profit was unexpectedly strong, and represented a 33 percent increase from last year. Principal Financial reported earnings of $271.4 million, or $0.91 per share, versus the $167.6 million profit or $0.72 per share from the same period a year ago. Revenue for the quarter was $2.31 billion, versus $2.12 billion a year prior. Analysts were expecting earnings of $0.83 a share on revenues of $2.39 billion.

In a conference call with investors, CEO Larry Donald Zimpleman expressed confidence in principal's future, and credited the company's succes in a volatile macroeconmic climate to "growth in our business, improved U.S. equity markets and continued expense discipline."

RBC Capital Market upped their price target for Principal a dollar to $42, citing the fact that the company has successfully transitioned from "a pure-play U.S. 401K company and (to a) more of a global asset manager." Barclays upped their price target of the stock from $41 a share to $44.

Principal shot up 5.57 percent on double normal volume. The stock is up 43.73 percent on the year. Pricipal currently sits at $42.72 a share, their highest since the 2008 recession.

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Companies

Symbol Name Price Change % Volume
JPITZ JPMORGAN CHASE BK PUFENG n/a n/a n/a 0
PFG Principal Financial Group Inc 49.80 -0.08 -0.16 1,398,289

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