Principal Financial (PFG) Earnings Expected to Grow: Should You Buy?

Principal Financial (PFG) is anticipated to report Q2 2025 earnings of $1.98 per share, a 21.5% year-over-year increase, despite an expected 1.7% revenue decline to $4 billion. While consensus EPS estimates saw a minor upward revision, the company's negative Zacks Earnings ESP of -1.14% combined with a Zacks Rank of #3, and a history of missing consensus estimates in the past four quarters, indicates a low probability of an earnings beat ahead of its July 28 release.

Analysis

Principal Financial (PFG) is approaching its Q2 2025 earnings release with a conflicting outlook. The consensus forecast anticipates a significant 21.5% year-over-year increase in earnings per share to $1.98, but this is set against an expected 1.7% decline in revenue to $4 billion. While the consensus EPS estimate has been revised upward by a marginal 0.31% over the past 30 days, more recent indicators signal rising caution among analysts. The company's Zacks Earnings ESP (Expected Surprise Prediction) is negative at -1.14%, indicating that the most recent analyst estimates are trending below the broader consensus. This bearish signal is further compounded by PFG's historical performance, as the company has failed to surpass consensus EPS estimates in any of the last four quarters, including a -2.16% miss in its most recent report. The combination of a neutral Zacks Rank #3 (Hold) with a negative ESP and a consistent track record of earnings misses makes it difficult to project a positive surprise, despite the headline year-over-year profit growth expectation.

Key Decisions for Investors

• Investors should exercise caution ahead of the July 28 earnings release, as the negative Earnings ESP of -1.14% and a four-quarter streak of missing consensus EPS estimates signal a heightened probability of another earnings disappointment.
• Pay close attention to management's commentary on the earnings call for justification of the divergence between the projected 21.5% earnings growth and the 1.7% revenue decline, as margin sustainability is a key risk.
• Given the bearish quantitative signals and historical underperformance against estimates, initiating new long positions before the report carries significant risk; it may be more prudent to hold existing positions or consider hedging strategies to mitigate potential downside volatility.