Principal Financial (PFG) Moves 6.5% Higher: Will This Strength Last?

Principal Financial (PFG) shares rallied 6.5% in the last trading session to close at $118.51. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 3.1% loss over the past four weeks.

Principal Financial benefits from a diversified mix of retirement, asset management, insurance and employee benefits, which supports recurring fees, premiums and investment income. Assets under management provide the base for recurring management, administration and advisory fees. Over time, a larger asset base can still support fee growth and operating leverage if sales and investment performance offset outflows.

PFG recently bought Beam Benefits. Beam's scalable, digital-first capabilities complement the Principal Benefits and Protection business and will further enhance the customer and broker experience. This acquisition marks an important milestone in PFG's strategy to accelerate growth in this important market.

Principal Financial is positioned to benefit from sustained demand for workplace savings, retirement income and pension solutions. Its recordkeeping scale and focus on small and midsized businesses create long-duration client relationships and recurring participant contributions.

This financial services company is expected to post quarterly earnings of $2.53 per share in its upcoming report, which represents a year-over-year change of +20.5%. Revenues are expected to be $4.29 billion, up 10.2% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Principal Financial, the consensus EPS estimate for the quarter has been revised marginally lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on PFG going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Principal Financial is part of the Zacks Insurance - Multi line industry. Old Republic International (ORI), another stock in the same industry, closed the last trading session 1.1% higher at $42.57. ORI has returned -3.3% in the past month.

Old Republic's consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.77. Compared to the company's year-ago EPS, this represents a change of -30.6%. Old Republic currently boasts a Zacks Rank of #3 (Hold).

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This article originally published on Zacks Investment Research (zacks.com).

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