Principal Financial Likely to Miss - Analyst Blog
29 Enero 2013 - 12:09PM
Zacks
Principal Financial Group Inc. (PFG) is set to
report fourth quarter and full year 2012 results on Jan 31. In the
last quarter, it posted an 8.2% negative surprise. Let’s see how
things are shaping up for this announcement.
Factors this Past Quarter
Principal Financial’s investment income is expected to be weighed
on by the low interest rate environment. The company had earlier
predicted that 2012 operating earnings would be affected by 1%–2%,
if the low interest rate environment persists. The impact may
increase by 3%–8%, if it persists longer.
Nevertheless, its sound capital position and financial liquidity
are supportive of its expansion policies in the emerging markets as
they offer ample growth opportunities. Principal Financial remains
on track to deploy $800–$900 million in 2012 and expects to spend
$400–$600 million in 2013. It already enhanced its dividend
by 17%.
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 (Read: Zacks
Earnings ESP: A Better Method) and a Zacks Rank of #1, 2 or 3 for
this to happen. This is not the case here as you will see
below.
Positive Zacks ESP: That is because the Most
Accurate estimate stands at 75 cents while the Zacks Consensus
Estimate is lower at 74 cents. That is a difference of +1.35%.
Zacks Rank #5 (Strong Sell): Principal Financial’s
Zacks Rank #5 (Strong Sell) lowers the predictive power. However,
Zacks Rank #5 when combined with a positive ESP makes surprise
prediction difficult. We caution against stocks with Zacks #4 and
#5 Ranks (Sell rated stocks) going into the earnings announcement,
especially when the company is seeing negative estimate revisions
momentum.
Other Stocks to Consider
Here are some other companies you may want to consider as our model
shows they have the right combination of elements to post an
earnings beat this quarter:
CNO Financial Group, Inc. (CNO), Earnings ESP of
+4.35% and Zacks Rank #2 (Buy).
Alterra Capital Holdings Limited (ALTE), Earnings
ESP of +6.98 % and Zacks Rank #3 (Hold).
The Hartford Financial Services Group, Inc. (HIG),
Earnings ESP of +16.67% and Zacks Rank #3 (Hold).
ALTERRA CAP HLD (ALTE): Free Stock Analysis Report
CNO FINL GRP (CNO): Free Stock Analysis Report
HARTFORD FIN SV (HIG): Free Stock Analysis Report
PRINCIPAL FINL (PFG): Free Stock Analysis Report
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