Principal Financial Group (NYSE: PFG) and Sun Life Financial (NYSE:SLF) are both large-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, dividends, institutional ownership, risk, valuation, analyst recommendations and earnings.
This is a summary of recent recommendations and price targets for Principal Financial Group and Sun Life Financial, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Principal Financial Group||1||6||2||0||2.11|
|Sun Life Financial||0||9||1||0||2.10|
Principal Financial Group presently has a consensus price target of $66.78, indicating a potential downside of 1.44%. Sun Life Financial has a consensus price target of $51.25, indicating a potential upside of 29.35%. Given Sun Life Financial’s higher possible upside, analysts plainly believe Sun Life Financial is more favorable than Principal Financial Group.
Volatility & Risk
Principal Financial Group has a beta of 1.67, meaning that its stock price is 67% more volatile than the S&P 500. Comparatively, Sun Life Financial has a beta of 0.88, meaning that its stock price is 12% less volatile than the S&P 500.
Principal Financial Group pays an annual dividend of $1.88 per share and has a dividend yield of 2.8%. Sun Life Financial pays an annual dividend of $1.39 per share and has a dividend yield of 3.5%. Principal Financial Group pays out 42.7% of its earnings in the form of a dividend. Sun Life Financial pays out 43.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Sun Life Financial has increased its dividend for 5 consecutive years. Sun Life Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Institutional and Insider Ownership
68.2% of Principal Financial Group shares are held by institutional investors. Comparatively, 40.9% of Sun Life Financial shares are held by institutional investors. 1.5% of Principal Financial Group shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
This table compares Principal Financial Group and Sun Life Financial’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Principal Financial Group||10.15%||13.57%||0.63%|
|Sun Life Financial||12.48%||13.29%||1.03%|
Earnings and Valuation
This table compares Principal Financial Group and Sun Life Financial’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Principal Financial Group||$12.56 billion||1.56||$1.88 billion||$4.40||15.40|
|Sun Life Financial||$20.89 billion||1.16||$3.07 billion||$3.17||12.50|
Sun Life Financial has higher revenue and earnings than Principal Financial Group. Sun Life Financial is trading at a lower price-to-earnings ratio than Principal Financial Group, indicating that it is currently the more affordable of the two stocks.
Principal Financial Group beats Sun Life Financial on 10 of the 17 factors compared between the two stocks.
About Principal Financial Group
Principal Financial Group, Inc. is an investment management company. The Company offers a range of financial products and services, including retirement, asset management and insurance. Its segments include Retirement and Income Solutions; Principal Global Investors, Principal International; U.S. Insurance Solutions, and Corporate. The Company offers a portfolio of products and services for retirement savings and retirement income. The Company’s Principal Global Investors segment manages assets for investors around the world. The Company offers pension accumulation products and services, mutual funds, asset management, income annuities and life insurance accumulation products. The Company’s U.S. Insurance Solutions segment provides group and individual insurance solutions. It focuses on small and medium-sized businesses, providing a range of retirement and employee benefit solutions, and individual insurance solutions to meet the needs of the business owners and their employees.
About Sun Life Financial
Sun Life Financial Inc. is the holding company of Sun Life Assurance Company of Canada. The Company is a financial services company providing a range of insurance, wealth and asset management solutions to individuals and corporate Clients. It operates through five segments. The Sun Life Financial Canada segment provides retail insurance and investment advice, products and services to people across Canada. The SLF U.S. segment has three business units: Group Benefits, International and In-force Management. Its Sun Life Financial Asset Management segment consists of MFS Investment Management and Sun Life Investment Management. The SLF Asia segment operates through subsidiaries in the Philippines, Hong Kong, Indonesia and Vietnam, as well as through joint ventures and associates with local partners in the Philippines, India, China and Malaysia. Its Corporate segment includes SLF U.K. and Corporate Support. Corporate Support operations consist of its Run-off reinsurance business.
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