Head-To-Head Analysis: Principal Financial Group (NASDAQ:PFG) vs. W.R. Berkley (NYSE:WRB)

Principal Financial Group (NASDAQ:PFG) and W.R. Berkley (NYSE:WRB) 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, valuation, institutional ownership, risk, profitability, dividends and analyst recommendations.

Dividends

Principal Financial Group pays an annual dividend of $3.36 per share and has a dividend yield of 3.0%. W.R. Berkley pays an annual dividend of $0.40 per share and has a dividend yield of 0.5%. Principal Financial Group pays out 37.3% of its earnings in the form of a dividend. W.R. Berkley pays out 8.5% 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 2 consecutive years and W.R. Berkley has increased its dividend for 23 consecutive years.

Volatility and Risk

Principal Financial Group has a beta of 0.87, meaning that its stock price is 13% less volatile than the S&P 500. Comparatively, W.R. Berkley has a beta of 0.23, meaning that its stock price is 77% less volatile than the S&P 500.

Valuation and Earnings

This table compares Principal Financial Group and W.R. Berkley”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Principal Financial Group	$15.63 billion	1.54	$1.19 billion	$9.00	12.61
W.R. Berkley	$14.71 billion	1.96	$1.78 billion	$4.73	16.38

W.R. Berkley has lower revenue, but higher earnings than Principal Financial Group. Principal Financial Group is trading at a lower price-to-earnings ratio than W.R. Berkley, indicating that it is currently the more affordable of the two stocks.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Principal Financial Group	11.89%	16.51%	0.58%
W.R. Berkley	12.53%	19.70%	4.27%

Analyst Ratings

This is a breakdown of current ratings for Principal Financial Group and W.R. Berkley, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Principal Financial Group	3	6	3	0	2.00
W.R. Berkley	6	9	3	0	1.83

Principal Financial Group currently has a consensus price target of $107.75, suggesting a potential downside of 5.09%. W.R. Berkley has a consensus price target of $70.56, suggesting a potential downside of 8.91%. Given Principal Financial Group’s stronger consensus rating and higher probable upside, equities analysts clearly believe Principal Financial Group is more favorable than W.R. Berkley.

Insider & Institutional Ownership

75.1% of Principal Financial Group shares are owned by institutional investors. Comparatively, 68.8% of W.R. Berkley shares are owned by institutional investors. 1.1% of Principal Financial Group shares are owned by company insiders. Comparatively, 25.1% of W.R. Berkley shares are owned 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.

Summary

W.R. Berkley beats Principal Financial Group on 9 of the 16 factors compared between the two stocks.

About Principal Financial Group

Principal Financial Group, Inc. is a financial services company headquartered in Des Moines, Iowa. Founded in 1879 as Bankers Life Association, it later adopted the Principal name and expanded beyond its original insurance business. The company provides retirement and pension solutions, investment management, life and disability insurance, and employee benefits to businesses, individuals, and institutional clients. Its offerings include workplace retirement plans, group benefits, and investment products and services.

About W.R. Berkley

W.R. Berkley Corporation is an insurance holding company that provides commercial property and casualty insurance, reinsurance, and related services. Its offerings include coverage for businesses and professionals across areas such as property, casualty, workers’ compensation, transportation, and specialty risks. Founded in 1967 by William R. Berkley, the company operates through a group of insurance businesses with expertise in specific markets and customer needs. Its operations serve customers in the United States and select international markets.