Financial Analysis: Principal Financial Group (PFG) vs. GWG Holdings (GWGH)
GWG Holdings (NASDAQ: GWGH) and Principal Financial Group (NYSE:PFG) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their valuation, institutional ownership, risk, earnings, analyst recommendations, dividends and profitability.
This table compares GWG Holdings and Principal Financial Group’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%|
Volatility and Risk
GWG Holdings has a beta of 0.49, meaning that its share price is 51% less volatile than the S&P 500. Comparatively, Principal Financial Group has a beta of 1.67, meaning that its share price is 67% more volatile than the S&P 500.
This is a breakdown of recent ratings for GWG Holdings and Principal Financial Group, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Principal Financial Group||2||4||2||0||2.00|
GWG Holdings currently has a consensus price target of $14.50, indicating a potential upside of 43.39%. Principal Financial Group has a consensus price target of $62.29, indicating a potential downside of 4.67%. Given GWG Holdings’ stronger consensus rating and higher probable upside, analysts plainly believe GWG Holdings is more favorable than Principal Financial Group.
Insider & Institutional Ownership
42.5% of GWG Holdings shares are owned by institutional investors. Comparatively, 68.3% of Principal Financial Group shares are owned by institutional investors. 77.4% of GWG Holdings shares are owned by insiders. Comparatively, 1.5% of Principal Financial Group shares are owned by 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.
Principal Financial Group pays an annual dividend of $1.88 per share and has a dividend yield of 2.9%. GWG Holdings does not pay a dividend. Principal Financial Group pays out 42.7% of its earnings in the form of a dividend. GWG Holdings has raised its dividend for 5 consecutive years.
Earnings and Valuation
This table compares GWG Holdings and Principal Financial Group’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|GWG Holdings||$62.55 million||0.93||-$15.50 million||($2.68)||-3.77|
|Principal Financial Group||$12.56 billion||1.50||$1.88 billion||$4.40||14.85|
Principal Financial Group has higher revenue and earnings than GWG Holdings. GWG Holdings 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.
Principal Financial Group beats GWG Holdings on 9 of the 15 factors compared between the two stocks.
About GWG Holdings
GWG Holdings, Inc. is the parent company of GWG Life, is a financial services company. The Company is focused on transforming the life insurance industry through its products and services. The Company has developed a new suite of options for the life insurance secondary market called LifeCare Xchange (LCX). This new capability provides seniors with the exchange value of their life insurance policies they can apply to long-term care and other post-retirement needs. Through its subsidiary GWG Life, LLC, seeks to further transform the industry by applying proprietary M-Panel epigenetic technology to disrupt traditional life insurance underwriting practices.
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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