Principal Financial Group (NASDAQ:PFG) & Old Republic International (NYSE:ORI) Critical Contrast

Principal Financial Group (NASDAQ:PFG) and Old Republic International (NYSE:ORI) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, institutional ownership, profitability, risk, valuation and earnings.

Volatility & Risk

Principal Financial Group has a beta of 0.88, suggesting that its stock price is 12% less volatile than the S&P 500. Comparatively, Old Republic International has a beta of 0.6, suggesting that its stock price is 40% less volatile than the S&P 500.

Institutional & Insider Ownership

75.1% of Principal Financial Group shares are owned by institutional investors. Comparatively, 70.9% of Old Republic International shares are owned by institutional investors. 1.1% of Principal Financial Group shares are owned by insiders. Comparatively, 1.3% of Old Republic International shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Principal Financial Group and Old Republic International, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Principal Financial Group	1	7	3	0	2.18
Old Republic International	1	1	1	1	2.50

Principal Financial Group currently has a consensus target price of $98.10, indicating a potential downside of 11.71%. Old Republic International has a consensus target price of $42.00, indicating a potential upside of 9.01%. Given Old Republic International’s stronger consensus rating and higher probable upside, analysts clearly believe Old Republic International is more favorable than Principal Financial Group.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Principal Financial Group	10.10%	16.25%	0.57%
Old Republic International	10.83%	15.71%	3.23%

Dividends

Principal Financial Group pays an annual dividend of $3.28 per share and has a dividend yield of 3.0%. Old Republic International pays an annual dividend of $1.26 per share and has a dividend yield of 3.3%. Principal Financial Group pays out 46.9% of its earnings in the form of a dividend. Old Republic International pays out 33.8% 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. Principal Financial Group has increased its dividend for 2 consecutive years and Old Republic International has increased its dividend for 45 consecutive years. Old Republic International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Principal Financial Group and Old Republic International”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Principal Financial Group	$15.46 billion	1.55	$1.19 billion	$6.99	15.90
Old Republic International	$9.14 billion	1.02	$935.40 million	$3.73	10.33

Principal Financial Group has higher revenue and earnings than Old Republic International. Old Republic International 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.

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.

About Old Republic International

Old Republic International Corporation, through its subsidiaries, engages in the insurance underwriting and related services business primarily in the United States and Canada. It operates through three segments: General Insurance, Title Insurance, and Republic Financial Indemnity Group Run-off Business. The General Insurance segment offers aviation, commercial auto, commercial multi-peril, commercial property, general liability, home and auto warranty, inland marine, travel accident, and workers' compensation insurance products; and financial indemnity products for specialty coverages, including errors and omissions, fidelity, directors and officers, and surety. This segment provides its insurance products to businesses, state and local government, and other institutions in transportation, commercial construction, healthcare, education, retail and wholesale trade, forest products, energy, general manufacturing, and financial services industries. The Title Insurance segment offers lenders' and owners' policies to real estate purchasers and investors based upon searches of the public records. This segment also provides escrow closing and construction disbursement services; and real estate information products, national default management services, and various other services pertaining to real estate transfers and loan transactions. The Republic Financial Indemnity Group Run-off Business segment offers private mortgage insurance coverage that protects mortgage lenders and investors from default related losses on residential mortgage loans made primarily to homebuyers. Old Republic International Corporation was founded in 1923 and is based in Chicago, Illinois.