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

Earnings and Valuation

This table compares Principal Financial Group and Lincoln National Corporation’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 1.54 $1.92 billion $4.40 15.24
Lincoln National Corporation $13.86 billion 1.20 $2.17 billion $6.52 11.39

Lincoln National Corporation has higher revenue and earnings than Principal Financial Group. Lincoln National Corporation 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.

Insider and Institutional Ownership

70.5% of Principal Financial Group shares are held by institutional investors. Comparatively, 80.1% of Lincoln National Corporation shares are held by institutional investors. 1.5% of Principal Financial Group shares are held by company insiders. Comparatively, 1.4% of Lincoln National Corporation shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Principal Financial Group and Lincoln National Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Principal Financial Group 3 4 2 0 1.89
Lincoln National Corporation 0 5 4 0 2.44

Principal Financial Group currently has a consensus target price of $59.50, suggesting a potential downside of 11.25%. Lincoln National Corporation has a consensus target price of $72.33, suggesting a potential downside of 2.58%. Given Lincoln National Corporation’s stronger consensus rating and higher probable upside, analysts plainly believe Lincoln National Corporation is more favorable than Principal Financial Group.

Volatility & Risk

Principal Financial Group has a beta of 1.65, indicating that its share price is 65% more volatile than the S&P 500. Comparatively, Lincoln National Corporation has a beta of 1.99, indicating that its share price is 99% more volatile than the S&P 500.

Dividends

Principal Financial Group pays an annual dividend of $1.84 per share and has a dividend yield of 2.7%. Lincoln National Corporation pays an annual dividend of $1.16 per share and has a dividend yield of 1.6%. Principal Financial Group pays out 41.8% of its earnings in the form of a dividend. Lincoln National Corporation pays out 17.8% 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 raised its dividend for 5 consecutive years and Lincoln National Corporation has raised its dividend for 6 consecutive years.

Profitability

This table compares Principal Financial Group and Lincoln National Corporation’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%
Lincoln National Corporation 10.85% 11.12% 0.64%

Summary

Lincoln National Corporation beats Principal Financial Group on 12 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 Lincoln National Corporation

Lincoln National Corporation is a holding company, which operates insurance and retirement businesses through subsidiary companies. The Company sells a range of wealth protection, accumulation and retirement income products and solutions, through its business segments. The Company operates through four segments: Annuities segment, which offers fixed (including indexed) and variable annuities; Retirement Plan Services segment, which provides employers with retirement plan products and services; Life Insurance segment, which focuses on the creation and protection of wealth through life insurance products, and Group Protection, which offers principally group non-medical insurance products. These products include fixed and indexed annuities, variable annuities, universal life insurance, variable universal life insurance, linked-benefit UL, term life insurance, indexed universal life insurance, employer-sponsored retirement plans and services, and group life, disability and dental.

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