Aegon NV (AEG) versus Principal Financial Group (PFG) Financial Analysis

Aegon NV (NYSE: AEG) and Principal Financial Group (NYSE:PFG) are both large-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, institutional ownership, dividends, analyst recommendations, profitability, valuation and risk.

Analyst Ratings

This is a summary of recent recommendations and price targets for Aegon NV and Principal Financial Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Aegon NV 0 5 0 0 2.00
Principal Financial Group 1 6 2 0 2.11

Aegon NV presently has a consensus price target of $4.80, suggesting a potential downside of 20.92%. Principal Financial Group has a consensus price target of $66.78, suggesting a potential downside of 1.88%. Given Principal Financial Group’s stronger consensus rating and higher possible upside, analysts clearly believe Principal Financial Group is more favorable than Aegon NV.

Institutional and Insider Ownership

10.4% of Aegon NV shares are held by institutional investors. Comparatively, 68.0% of Principal Financial Group shares are held by institutional investors. 1.5% of Principal Financial Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Risk and Volatility

Aegon NV has a beta of 1.42, meaning that its share price is 42% more volatile than the S&P 500. Comparatively, Principal Financial Group has a beta of 1.71, meaning that its share price is 71% more volatile than the S&P 500.

Earnings and Valuation

This table compares Aegon NV and Principal Financial Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Aegon NV $37.25 billion 0.33 $483.58 million $0.99 6.13
Principal Financial Group $12.38 billion 1.59 $1.32 billion $6.10 11.16

Principal Financial Group has higher revenue, but lower earnings than Aegon NV. Aegon NV 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.

Profitability

This table compares Aegon NV and Principal Financial Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Aegon NV 5.64% 6.60% 0.39%
Principal Financial Group 12.35% 13.55% 0.63%

Dividends

Aegon NV pays an annual dividend of $0.25 per share and has a dividend yield of 4.1%. Principal Financial Group pays an annual dividend of $1.88 per share and has a dividend yield of 2.8%. Aegon NV pays out 25.3% of its earnings in the form of a dividend. Principal Financial Group pays out 30.8% 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. Principal Financial Group has increased its dividend for 5 consecutive years. Aegon NV is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Principal Financial Group beats Aegon NV on 14 of the 17 factors compared between the two stocks.

About Aegon NV

Aegon N.V. (Aegon) is an international life insurance, pensions and asset management company. The Company’s segments include the Americas, which includes the United States, Mexico and Brazil; the Netherlands; the United Kingdom; Central & Eastern Europe; Spain & Portugal; Asia, and Aegon Asset Management. It offers protection against mortality, morbidity and longevity risks, including traditional and universal life. It offers products with mortality, morbidity, and longevity risks, including traditional and universal life; mortgages; annuity products, and banking products. It offers individual protection products, such as annuities, term insurance, income protection and international/offshore bonds. It has activities in the Czech Republic, Hungary, Poland, Romania, Slovakia and Turkey. It offers life insurance marketed to high-net-worth individuals in Hong Kong and Singapore. It also offers investment products covering third-party customers, insurance-linked solutions.

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.

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