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

Dividends

Voya Financial pays an annual dividend of $0.04 per share and has a dividend yield of 0.1%. Principal Financial Group pays an annual dividend of $1.84 per share and has a dividend yield of 2.8%. Voya Financial pays out -1.0% 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. Voya Financial has raised its dividend for 5 consecutive years.

Valuation & Earnings

This table compares Voya Financial and Principal Financial Group’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Voya Financial $9.99 billion 0.76 -$486.40 million ($3.83) -10.63
Principal Financial Group $12.56 billion 1.52 $1.92 billion $4.40 15.05

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

Analyst Recommendations

This is a summary of current recommendations and price targets for Voya Financial and Principal Financial Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Voya Financial 1 1 8 0 2.70
Principal Financial Group 3 4 2 0 1.89

Voya Financial currently has a consensus target price of $46.11, suggesting a potential upside of 13.21%. Principal Financial Group has a consensus target price of $59.50, suggesting a potential downside of 10.16%. Given Voya Financial’s stronger consensus rating and higher possible upside, equities analysts plainly believe Voya Financial is more favorable than Principal Financial Group.

Insider & Institutional Ownership

70.5% of Principal Financial Group shares are held by institutional investors. 0.2% of Voya Financial 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 hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Risk and Volatility

Voya Financial has a beta of 1.62, suggesting that its share price is 62% more volatile than the S&P 500. Comparatively, Principal Financial Group has a beta of 1.65, suggesting that its share price is 65% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Voya Financial -7.67% 3.68% 0.25%
Principal Financial Group 10.15% 13.57% 0.63%

Summary

Principal Financial Group beats Voya Financial on 11 of the 17 factors compared between the two stocks.

Voya Financial Company Profile

Voya Financial, Inc. is a retirement, investment and insurance company. The Company operates through five segments: Retirement, Investment Management, Annuities, Individual Life and Employee Benefits. The Retirement segment is a provider of retirement services and products in the United States. The Investment Management segment offers domestic and international fixed income, equity, multi-asset and alternatives products and solutions. The Annuities segment provides fixed and indexed annuities, tax-qualified mutual fund custodial and other investment-only products and payout annuities for pre-retirement wealth accumulation and post-retirement income management sold through multiple channels. The Individual Life segment provides wealth protection and transfer opportunities through universal and variable products. The Employee Benefits segment provides stop loss, group life, voluntary employee-paid and disability products to mid-sized and large businesses.

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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