Waterdrop (NYSE:WDH) vs. Principal Financial Group (NASDAQ:PFG) Head to Head Comparison

Waterdrop (NYSE:WDH) and Principal Financial Group (NASDAQ:PFG) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, valuation, institutional ownership, earnings, analyst recommendations, risk and profitability.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Waterdrop and Principal Financial Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Waterdrop	0	2	0	0	2.00
Principal Financial Group	1	7	2	0	2.10

Waterdrop presently has a consensus target price of $2.00, suggesting a potential upside of 23.08%. Principal Financial Group has a consensus target price of $94.11, suggesting a potential upside of 10.63%. Given Waterdrop’s higher probable upside, research analysts plainly believe Waterdrop is more favorable than Principal Financial Group.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Waterdrop	15.58%	9.99%	7.57%
Principal Financial Group	7.58%	16.09%	0.57%

Dividends

Waterdrop pays an annual dividend of $0.04 per share and has a dividend yield of 2.5%. Principal Financial Group pays an annual dividend of $3.20 per share and has a dividend yield of 3.8%. Waterdrop pays out 21.1% of its earnings in the form of a dividend. Principal Financial Group pays out 60.7% 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. Principal Financial Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Waterdrop and Principal Financial Group”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Waterdrop	$3.25 billion	0.18	$50.35 million	$0.19	8.55
Principal Financial Group	$15.63 billion	1.18	$1.19 billion	$5.27	16.14

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

2.0% of Waterdrop shares are held by institutional investors. Comparatively, 75.1% of Principal Financial Group shares are held by institutional investors. 24.6% of Waterdrop shares are held by company insiders. Comparatively, 1.1% of Principal Financial Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Risk & Volatility

Waterdrop has a beta of -0.28, meaning that its stock price is 128% less volatile than the S&P 500. Comparatively, Principal Financial Group has a beta of 0.87, meaning that its stock price is 13% less volatile than the S&P 500.

Summary

Principal Financial Group beats Waterdrop on 12 of the 17 factors compared between the two stocks.

About Waterdrop

Waterdrop Inc., through its subsidiaries, provides online insurance brokerage services to match and connect users with related insurance products underwritten by insurance companies in the People's Republic of China. The company offers short-term health and long-term health and life insurance products and services. It also operates a medical crowdfunding platform. Waterdrop Inc. was founded in 2016 and is headquartered in Beijing, the People's Republic of China.

About Principal Financial Group

Principal Financial Group, Inc. provides retirement, asset management, and insurance products and services to businesses, individuals, and institutional clients worldwide. The company operates through Retirement and Income Solutions, Principal Global Investors, Principal International, and U.S. Insurance Solutions segments. The Retirement and Income Solutions segment provides a portfolio of asset accumulation products and services for retirement savings and income. It offers products and services for defined contribution plans, including 401(k) and 403(b) plans, defined benefit pension plans, nonqualified executive benefit plans, employee stock ownership plans, equity compensation, and pension risk transfer services; individual retirement accounts; investment only products; and mutual funds, individual variable annuities, and bank products. The Principal Global Investors segment provides equity, fixed income, real estate, and other alternative investments, as well as asset allocation, stable value management, and other structured investment strategies. The Principal International segment offers pension accumulation products and services, mutual funds, asset management, income annuities, and life insurance accumulation products, as well as voluntary savings plans in Brazil, Chile, Mexico, China, Hong Kong Special Administrative Region, India, and Southeast Asia. The U.S. Insurance Solutions segment provides specialty benefits, such as group dental and vision insurance, group life insurance, and group and individual disability insurance, as well as administers group dental, disability, and vision benefits; and individual life insurance products comprising universal, variable universal, indexed universal, and term life insurance products in the United States. It also offers insurance solutions for small and medium-sized businesses and their owners, as well as executives. Principal Financial Group, Inc. was founded in 1879 and is based in Des Moines, Iowa.