Principal Financial Group’s third quarter results were met with a positive market reaction, reflecting investor confidence in the company’s diversified strategy and ongoing momentum across key business segments. Management identified enterprise net revenue growth, margin expansion, and strong cash flow as primary drivers of the quarter’s performance. CEO Deanna Strable pointed to the retirement ecosystem, small and midsized business solutions, and global asset management as areas of notable strength, highlighting, “Our year-to-date free capital flow conversion ratio of over 90% is tracking above target.” Margins benefited from disciplined expense management and favorable underwriting results, particularly in the Specialty Benefits segment.
Is now the time to buy PFG? Find out in our full research report (it’s free for active Edge members).
Principal Financial Group (PFG) Q3 CY2025 Highlights:
- Revenue: $3.90 billion vs analyst estimates of $4.10 billion (6.2% year-on-year growth, 4.7% miss)
- Adjusted EPS: $2.10 vs analyst expectations of $2.20 (4.5% miss)
- Adjusted Operating Income: $582.1 million vs analyst estimates of $667 million (14.9% margin, 12.7% miss)
- Market Capitalization: $18.46 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Principal Financial Group’s Q3 Earnings Call
- Francis Matten (BMO Capital Markets) questioned if margin expansion would persist at current levels, and CFO Joel Pitz explained margins should continue growing, but with ongoing investment in technology and business capabilities.
- Ryan Krueger (KBW) asked about shifts in investor sentiment for asset management and future pipeline. Kamal Bhatia, President of Principal Asset Management, noted continued strong demand in private markets and a positive outlook for new mandates, especially in real estate and global equities.
- John Barnidge (Piper Sandler) inquired about the impact of industry consolidation on 401(k) flows, and President Christopher Littlefield highlighted Principal’s scale advantage, stating that organic revenue growth remains the main focus as the number of recordkeepers is expected to shrink.
- Wilma Jackson Burdis (Raymond James) asked about growth in spread-based retirement solutions, and Littlefield pointed to strong inflows in guaranteed products and pension risk transfer, with a focus on smaller market segments.
- Jamminder Bhullar (JPMorgan) pressed on the sustainability of improved asset management flows, and Bhatia explained that higher-quality, longer-term mandates are supporting momentum, while portfolio performance in some areas is being addressed through risk management and talent additions.
Catalysts in Upcoming Quarters
In the coming quarters, key catalysts for Principal Financial Group include (1) the pace of digital modernization and rollout of new retirement and asset management offerings, (2) continued margin expansion while balancing investment in technology and customer-facing capabilities, and (3) net flows in private markets and real estate products as indicators of sustained demand. The impact of economic conditions and industry consolidation on key segments will also be important to watch.
Principal Financial Group currently trades at $84.04, up from $79.59 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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