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

Risk & Volatility

Unum Group has a beta of 1.56, meaning that its share price is 56% more volatile than the S&P 500. Comparatively, Principal Financial Group has a beta of 1.65, meaning that its share price is 65% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Unum Group 8.57% 10.23% 1.49%
Principal Financial Group 10.15% 13.57% 0.63%

Dividends

Unum Group pays an annual dividend of $0.92 per share and has a dividend yield of 1.8%. Principal Financial Group pays an annual dividend of $1.84 per share and has a dividend yield of 2.7%. Unum Group pays out 22.2% of its earnings in the form of a dividend. Principal Financial Group pays out 41.8% 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. Unum Group has increased its dividend for 5 consecutive years and Principal Financial Group has increased its dividend for 8 consecutive years. Principal Financial Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of current ratings and price targets for Unum Group and Principal Financial Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Unum Group 2 6 1 0 1.89
Principal Financial Group 3 4 2 0 1.89

Unum Group presently has a consensus target price of $45.50, indicating a potential downside of 10.43%. Principal Financial Group has a consensus target price of $59.50, indicating a potential downside of 11.25%. Given Unum Group’s higher possible upside, analysts plainly believe Unum Group is more favorable than Principal Financial Group.

Valuation & Earnings

This table compares Unum Group and Principal Financial Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Unum Group $11.19 billion 0.00 $1.66 billion $4.15 12.24
Principal Financial Group $12.56 billion 1.54 $1.92 billion $4.40 15.24

Principal Financial Group has higher revenue and earnings than Unum Group. Unum Group 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.

Institutional & Insider Ownership

93.0% of Unum Group shares are held by institutional investors. Comparatively, 70.5% of Principal Financial Group shares are held by institutional investors. 0.5% of Unum Group shares are held by company insiders. Comparatively, 1.5% of Principal Financial Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

Principal Financial Group beats Unum Group on 12 of the 16 factors compared between the two stocks.

Unum Group Company Profile

Unum Group is a provider of financial protection benefits in the United States and the United Kingdom. The Company’s products include disability, life, accident, critical illness, dental and vision, and other related services. Its segments include Unum US, Unum UK, Colonial Life, Closed Block and Corporate. Its Unum US segment includes group long-term and short-term disability insurance, group life and accidental death and dismemberment products, and supplemental and voluntary lines of business. Its Unum UK segment includes insurance for group long-term disability, group life, and supplemental lines of business, which include dental, individual disability and critical illness products. Its Colonial Life segment includes insurance for accident, sickness, and disability products, life products, and cancer and critical illness products issued primarily by Colonial Life & Accident Insurance Company and marketed to employees. Its Closed Block segment consists of other insurance products.

Principal Financial Group Company Profile

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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