May 25, 2023
Top 10 Stock Principal Financial Sell Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Principal Financial – Top 10 Stock in Employee Satisfaction Leaders in the United States
Principal Financial is listed as a top 10 stock on May 25, 2023 in the market index Employee Focus US because of its high performance in at least one of the Obermatt investment strategies. Only one consolidated Obermatt Rank is above-average. The company is safely financed, but all other facts speak against a stock purchase, especially the low market sentiment by professional investors. Based on the Obermatt 360° View of 8 (8% performer), Obermatt issues an overall sell recommendation for Principal Financial on May 25, 2023.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Life & Health Insurance |
| Index | Employee Focus US, Diversity USA, Renewables Users, NASDAQ, D.J. US Insurance, S&P 500 |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° Assessment Principal Financial Sell
| 360 METRICS | May 25, 2023 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 46 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 11 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 58 |
|
||||||
| SENTIMENT | ||||||||
| SENTIMENT | 8 |
|
||||||
| 360° VIEW | ||||||||
| 360° VIEW | 8 |
|
||||||
ANALYSIS: With an Obermatt 360° View of 8 (better than 8% compared with alternatives), overall professional sentiment and engagement for the stock Principal Financial are critical, mostly below average. The 360° View is based on consolidating four consolidated indicators, with three out of four metrics below average for Principal Financial. The only rank that is above average is the consolidated Safety Rank at 58, which means that the company has a financing structure that is safer than 58% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the Value, Growth and Sentiment Ranks are all below average. The consolidated Value Rank has a less desirable rank of 46, which means that the share price of Principal Financial is on the high side compared with typical size in indicators such as revenues, profits, and invested capital. The consolidated Growth Rank also has a low rank of 11, which implies that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. Finally, the consolidated Sentiment Rank is also low at a rank of 8, which means that professional investors are more pessimistic about the stock than for 92% of alternative investment opportunities. While Safety is strong, it’s not the most critical indicator, so we suggest proceeding with caution if you are considering this stock. ...read more
RECOMMENDATION: With a 360° View of 8, Principal Financial is worse than 92% of all alternative stock investment opportunities based on the Obermatt Method. This means that Principal Financial shares are on the riskier side for investors. As only the financing structure, namely the Safety Rank, is on the safer side and all other consolidated Obermatt Ranks are below-average, this is a riskier stock investment proposition. This is especially the case, since professional investor sentiment, the consolidated Obermatt Sentiment Rank, is also low at 8. The negative market view on Principal Financial may be the high stock price (low value) or the low level of growth. This is a problem. As the Safety Rank is the least important of the four, we cannot identify enough positive facts that are visible today to make a case for this stock investment. The company may have a strong future which would justify the high stock price, but this is not visible from investor behavior today. As market sentiment is critical, you should be careful with paying more than market-average for this stock, and conduct further research into the company's future growth potential. Prudent investors may only want to invest a smaller portion of their wealth in such situations. Young investors can carry more risk but should still thrive for sufficient diversification. ...read more
Sentiment Strategy: Professional Market Sentiment for Principal Financial negative
ANALYSIS: With an Obermatt Sentiment Rank of 8 (better than 8% compared with alternatives), overall professional sentiment and engagement for the stock Principal Financial is critical, mostly below average. The Sentiment Rank is based on consolidating four sentiment indicators, with half the indicators below and the other half above average for Principal Financial. Analyst Opinions are at a rank of 1 (worse than 99% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. Worse, Analyst Opinions Change has a rank of 16, which means that stock research experts are getting more pessimistic. It doesn't end with the analysts. Market Pulse is also low with a rank of 35, which means that the current professional news and professional social networks tend to be negative when discussing this company (more negative news than for 65% of competitors). On the upside, the Professional Investors rank is 54, which means that professional investors hold more stock in this company than in 54% of alternative investment opportunities. Pros tend to favor investing in this company. This could be due to a large company size, which could contribute to the higher share of professional investors in the company. If this is not the case, the low sentiment ranks are more challenging to explain. ...read more
RECOMMENDATION: With an Obermatt Sentiment Rank of 8 (less encouraging than 92% compared with investment alternatives), Principal Financial has a reputation among professional investors that is far below that of its competitors. Should the company be on the smaller side, the presence of professional investors could be reassuring. That would make Principal Financial stock something like a hidden gem. Investors should make sure with further research that this is true, because all other sentiment indicators are negative which is a sign for caution. ...read more
Value Strategy: Principal Financial Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 46 (worse than 54% compared with alternatives), Principal Financial shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with three out of four indicators above average for Principal Financial. Price-to-Sales (P/S) is 54, which means that the stock price compared with what market professionals expect for future sales is lower than for 54% of comparable companies, indicating a good value concerning Principal Financial's revenue size. The same is valid for expected Price-to-Profits (or Price / Earnings, P/E), more favorable than for 59% of alternatives. Finally, it is true for expected dividend yields with an Dividend Yield rank of 63 (dividends are expected to be higher than 63% of other stocks). But, compared with other companies in the same industry, the Price-to-Book Capital ratio (also referred to as market-to-book ratio) is higher than average, making the stock more expensive. Only 51% of all competitors have an even higher price compared with book capital which puts the Price-to-Capital Rank for Principal Financial to 49. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 46, is a HOLD recommendation based on Principal Financial's stock price compared with the company's operational size and dividend yields. A low level of book capital means that the company has a business that is leaner in assets than its competitors. For instance, the company could be leasing its production facilities or be more focussed on intellectual property, such as its brand and software, which is less visible in its book capital. If that is the case, the three good value ranks for Sales, Profits, and Dividends are reliable indicators for the stock price value. ...read more
Growth Strategy: Principal Financial Growth Momentum negative
ANALYSIS: With an Obermatt Growth Rank of 11 (better than 11% compared with alternatives), Principal Financial shows one of the most restricted growth dynamics in its industry. There is little momentum in this company. The Growth Rank is based on consolidating four value indicators, with all four metrics below average for Principal Financial. Sales Growth has a rank of 43, which means that currently professionals expect the company to grow less than 57% of its competitors. The same is valid for Profit Growth, with a rank of 25, and Capital Growth with 19. In addition, Stock Returns have a below market rank of 41, which means that the stock returns have recently been below 59% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 11, is a SELL recommendation for growth and momentum investors. These are all bad growth momentum indicators. These are negative signals for investors interested in growth companies. Value is likely good for this company, as investors may have left this stock in the cold. If that is the case, investors should look at the company's prospects, especially Sentiment performance, because it may be a turnaround situation that could entail above-average returns in the future. But it remains a risky bet, as no growth signals are in the green zone yet. ...read more
Safety Strategy: Principal Financial Debt Financing Safety above-average
| SAFETY METRICS | May 25, 2023 | |||||||
|---|---|---|---|---|---|---|---|---|
| LEVERAGE | ||||||||
| LEVERAGE | 63 |
|
||||||
| REFINANCING | ||||||||
| REFINANCING | 50 |
|
||||||
| LIQUIDITY | ||||||||
| LIQUIDITY | 100 |
|
||||||
| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 58 |
|
||||||
ANALYSIS: With an Obermatt Safety Rank of 58 (better than 58% compared with alternatives), the company Principal Financial has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of Principal Financial is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, where all three are above average for Principal Financial. Leverage is at 63, meaning the company has a below-average debt-to-equity ratio. It has less debt than 63% of its competitors. Refinancing is at a rank of 50, meaning that the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 50% of its competitors. Finally, Liquidity is also good at a rank of 100, which means that the company generates more profit to service its debt than 100% of its competitors. ...read more
RECOMMENDATION: With an Obermatt Safety Rank of 58 (better than 58% compared with alternatives), Principal Financial has a financing structure that is safer than that of its competitors. These three positive financing indicators signal that the company is less likely to default on its debt obligations. However, it also means that its shareholder returns will be more modest if things go well. A low safety means fewer troubles in downtimes and less upside in good times. ...read more
Combined financial peformance: Principal Financial Top Financial Performance
| COMBINED PERFORMANCE | May 25, 2023 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 46 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 11 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 100 |
|
||||||
| COMBINED | ||||||||
| COMBINED | 95 |
|
||||||
ANALYSIS: With an Obermatt Combined Rank of 95 (better than 95% compared with investment alternatives), Principal Financial (Life & Health Insurance, USA) shares have much better financial characteristics than comparable stocks. Shares of Principal Financial are low in value (priced high) with a consolidated Obermatt Value Rank of 46 (worse than 54% of alternatives) and show below-average growth (Growth Rank of 11) but are safely financed (Safety Rank of 58), which means low debt burdens. ...read more
RECOMMENDATION: An Obermatt Combined Rank of 95, is a strong buy recommendation based on Principal Financial's financial characteristics. As the company Principal Financial's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 46) and low growth (Obermatt Growth Rank of 11), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. In this case, good financing practices (Obermatt Safety Rank of 58) are a positive sign, because it may allow the company to weather challenging times until the hoped-for cash flows materialize. This may be true for high-tech or biotechnology companies with enough cash to sustain prolonged business development. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and unattractive today. In such cases, the Obermatt Method has limited value, as it is based on facts we can observe today. If the facts lie all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that account for a small fraction of a safe portfolio. ...read more
Obermatt Portfolio Performance
We’re so convinced about our research, that we buy our stock tips.
See the performance of the Obermatt portfolio.