Intrinsic value of Principal Financial Group - PFG

Previous Close

$55.48

  Intrinsic Value

$55.29

stock screener

  Rating & Target

hold

-0%

Previous close

$55.48

 
Intrinsic value

$55.29

 
Up/down potential

-0%

 
Rating

hold

Our model is not good at valuating stocks of financial companies, such as PFG.

We calculate the intrinsic value of PFG stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 16.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  13.70
  12.83
  12.05
  11.34
  10.71
  10.14
  9.62
  9.16
  8.75
  8.37
  8.03
  7.73
  7.46
  7.21
  6.99
  6.79
  6.61
  6.45
  6.31
  6.18
  6.06
  5.95
  5.86
  5.77
  5.69
  5.62
  5.56
  5.51
  5.46
  5.41
Revenue, $m
  16,024
  18,080
  20,258
  22,555
  24,971
  27,502
  30,149
  32,911
  35,789
  38,784
  41,900
  45,139
  48,505
  52,003
  55,638
  59,417
  63,345
  67,432
  71,684
  76,110
  80,721
  85,525
  90,534
  95,759
  101,212
  106,904
  112,851
  119,064
  125,559
  132,352
Variable operating expenses, $m
  9,791
  11,047
  12,377
  13,781
  15,257
  16,804
  18,421
  20,108
  21,867
  23,697
  25,601
  27,580
  29,637
  31,774
  33,995
  36,304
  38,704
  41,201
  43,799
  46,503
  49,320
  52,256
  55,317
  58,509
  61,840
  65,319
  68,952
  72,748
  76,717
  80,867
Fixed operating expenses, $m
  3,371
  3,445
  3,520
  3,598
  3,677
  3,758
  3,841
  3,925
  4,012
  4,100
  4,190
  4,282
  4,376
  4,473
  4,571
  4,672
  4,774
  4,879
  4,987
  5,096
  5,209
  5,323
  5,440
  5,560
  5,682
  5,807
  5,935
  6,066
  6,199
  6,335
Total operating expenses, $m
  13,162
  14,492
  15,897
  17,379
  18,934
  20,562
  22,262
  24,033
  25,879
  27,797
  29,791
  31,862
  34,013
  36,247
  38,566
  40,976
  43,478
  46,080
  48,786
  51,599
  54,529
  57,579
  60,757
  64,069
  67,522
  71,126
  74,887
  78,814
  82,916
  87,202
Operating income, $m
  2,863
  3,588
  4,360
  5,176
  6,036
  6,940
  7,887
  8,877
  9,910
  10,987
  12,109
  13,277
  14,492
  15,756
  17,072
  18,441
  19,867
  21,351
  22,898
  24,510
  26,192
  27,946
  29,778
  31,690
  33,689
  35,779
  37,964
  40,250
  42,644
  45,149
EBITDA, $m
  30,262
  34,503
  38,998
  43,743
  48,734
  53,966
  59,438
  65,151
  71,105
  77,304
  83,754
  90,460
  97,431
  104,676
  112,208
  120,038
  128,181
  136,653
  145,470
  154,652
  164,217
  174,186
  184,582
  195,429
  206,751
  218,574
  230,927
  243,838
  257,337
  271,458
Interest expense (income), $m
  162
  4,434
  4,482
  4,752
  5,038
  5,340
  5,657
  5,990
  6,337
  6,700
  7,078
  7,471
  7,881
  8,306
  8,748
  9,208
  9,685
  10,182
  10,698
  11,234
  11,793
  12,374
  12,980
  13,611
  14,269
  14,955
  15,671
  16,419
  17,200
  18,016
  18,869
Earnings before tax, $m
  -1,571
  -894
  -392
  138
  697
  1,283
  1,898
  2,540
  3,210
  3,909
  4,638
  5,396
  6,186
  7,008
  7,864
  8,756
  9,685
  10,654
  11,664
  12,718
  13,818
  14,966
  16,167
  17,421
  18,734
  20,107
  21,545
  23,050
  24,627
  26,280
Tax expense, $m
  0
  0
  0
  37
  188
  346
  512
  686
  867
  1,056
  1,252
  1,457
  1,670
  1,892
  2,123
  2,364
  2,615
  2,877
  3,149
  3,434
  3,731
  4,041
  4,365
  4,704
  5,058
  5,429
  5,817
  6,224
  6,649
  7,096
Net income, $m
  -1,571
  -894
  -392
  101
  509
  937
  1,385
  1,854
  2,344
  2,854
  3,386
  3,939
  4,516
  5,116
  5,741
  6,392
  7,070
  7,777
  8,515
  9,284
  10,087
  10,925
  11,802
  12,718
  13,676
  14,678
  15,728
  16,827
  17,978
  19,184

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  43,307
  48,864
  54,750
  60,960
  67,488
  74,329
  81,483
  88,947
  96,726
  104,822
  113,243
  121,997
  131,095
  140,548
  150,373
  160,585
  171,203
  182,248
  193,740
  205,704
  218,165
  231,150
  244,688
  258,809
  273,545
  288,931
  305,002
  321,795
  339,349
  357,708
Adjusted assets (=assets-cash), $m
  43,307
  48,864
  54,750
  60,960
  67,488
  74,329
  81,483
  88,947
  96,726
  104,822
  113,243
  121,997
  131,095
  140,548
  150,373
  160,585
  171,203
  182,248
  193,740
  205,704
  218,165
  231,150
  244,688
  258,809
  273,545
  288,931
  305,002
  321,795
  339,349
  357,708
Revenue / Adjusted assets
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
Average production assets, $m
  273,990
  309,143
  346,385
  385,673
  426,972
  470,255
  515,510
  562,737
  611,948
  663,172
  716,448
  771,830
  829,387
  889,197
  951,355
  1,015,964
  1,083,140
  1,153,013
  1,225,720
  1,301,411
  1,380,247
  1,462,398
  1,548,047
  1,637,386
  1,730,619
  1,827,959
  1,929,632
  2,035,875
  2,146,939
  2,263,083
Working capital, $m
  -271,218
  -306,015
  -342,881
  -381,771
  -422,652
  -465,497
  -510,294
  -557,043
  -605,757
  -656,462
  -709,199
  -764,021
  -820,995
  -880,201
  -941,729
  -1,005,685
  -1,072,182
  -1,141,347
  -1,213,319
  -1,288,244
  -1,366,282
  -1,447,603
  -1,532,385
  -1,620,820
  -1,713,109
  -1,809,464
  -1,910,109
  -2,015,277
  -2,125,217
  -2,240,187
Total debt, $m
  82,997
  87,998
  93,296
  98,884
  104,759
  110,917
  117,354
  124,073
  131,073
  138,360
  145,939
  153,818
  162,005
  170,514
  179,356
  188,547
  198,103
  208,043
  218,386
  229,154
  240,368
  252,055
  264,239
  276,948
  290,211
  304,058
  318,522
  333,635
  349,435
  365,957
Total liabilities, $m
  38,977
  43,977
  49,275
  54,864
  60,739
  66,896
  73,334
  80,053
  87,053
  94,340
  101,919
  109,797
  117,985
  126,494
  135,336
  144,527
  154,083
  164,023
  174,366
  185,133
  196,348
  208,035
  220,219
  232,928
  246,191
  260,038
  274,501
  289,615
  305,415
  321,937
Total equity, $m
  4,331
  4,886
  5,475
  6,096
  6,749
  7,433
  8,148
  8,895
  9,673
  10,482
  11,324
  12,200
  13,109
  14,055
  15,037
  16,059
  17,120
  18,225
  19,374
  20,570
  21,816
  23,115
  24,469
  25,881
  27,355
  28,893
  30,500
  32,179
  33,935
  35,771
Total liabilities and equity, $m
  43,308
  48,863
  54,750
  60,960
  67,488
  74,329
  81,482
  88,948
  96,726
  104,822
  113,243
  121,997
  131,094
  140,549
  150,373
  160,586
  171,203
  182,248
  193,740
  205,703
  218,164
  231,150
  244,688
  258,809
  273,546
  288,931
  305,001
  321,794
  339,350
  357,708
Debt-to-equity ratio
  19.160
  18.010
  17.040
  16.220
  15.520
  14.920
  14.400
  13.950
  13.550
  13.200
  12.890
  12.610
  12.360
  12.130
  11.930
  11.740
  11.570
  11.420
  11.270
  11.140
  11.020
  10.900
  10.800
  10.700
  10.610
  10.520
  10.440
  10.370
  10.300
  10.230
Adjusted equity ratio
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1,571
  -894
  -392
  101
  509
  937
  1,385
  1,854
  2,344
  2,854
  3,386
  3,939
  4,516
  5,116
  5,741
  6,392
  7,070
  7,777
  8,515
  9,284
  10,087
  10,925
  11,802
  12,718
  13,676
  14,678
  15,728
  16,827
  17,978
  19,184
Depreciation, amort., depletion, $m
  27,399
  30,914
  34,639
  38,567
  42,697
  47,025
  51,551
  56,274
  61,195
  66,317
  71,645
  77,183
  82,939
  88,920
  95,135
  101,596
  108,314
  115,301
  122,572
  130,141
  138,025
  146,240
  154,805
  163,739
  173,062
  182,796
  192,963
  203,588
  214,694
  226,308
Funds from operations, $m
  25,828
  30,021
  34,246
  38,668
  43,206
  47,962
  52,936
  58,128
  63,538
  69,171
  75,030
  81,122
  87,454
  94,036
  100,877
  107,988
  115,384
  123,079
  131,087
  139,425
  148,112
  157,165
  166,606
  176,456
  186,738
  197,474
  208,691
  220,414
  232,672
  245,493
Change in working capital, $m
  -32,680
  -34,797
  -36,866
  -38,891
  -40,880
  -42,845
  -44,797
  -46,749
  -48,714
  -50,705
  -52,737
  -54,822
  -56,974
  -59,205
  -61,529
  -63,955
  -66,497
  -69,166
  -71,971
  -74,925
  -78,038
  -81,320
  -84,782
  -88,435
  -92,289
  -96,355
  -100,644
  -105,169
  -109,940
  -114,970
Cash from operations, $m
  58,508
  64,818
  71,112
  77,559
  84,086
  90,808
  97,734
  104,877
  112,252
  119,876
  127,767
  135,944
  144,429
  153,241
  162,405
  171,944
  181,882
  192,244
  203,058
  214,350
  226,150
  238,486
  251,389
  264,891
  279,027
  293,829
  309,335
  325,583
  342,611
  360,462
Maintenance CAPEX, $m
  -24,098
  -27,399
  -30,914
  -34,639
  -38,567
  -42,697
  -47,025
  -51,551
  -56,274
  -61,195
  -66,317
  -71,645
  -77,183
  -82,939
  -88,920
  -95,135
  -101,596
  -108,314
  -115,301
  -122,572
  -130,141
  -138,025
  -146,240
  -154,805
  -163,739
  -173,062
  -182,796
  -192,963
  -203,588
  -214,694
New CAPEX, $m
  -33,012
  -35,153
  -37,242
  -39,288
  -41,298
  -43,283
  -45,255
  -47,227
  -49,212
  -51,223
  -53,276
  -55,383
  -57,556
  -59,811
  -62,157
  -64,609
  -67,177
  -69,872
  -72,707
  -75,691
  -78,836
  -82,152
  -85,649
  -89,339
  -93,232
  -97,340
  -101,673
  -106,244
  -111,063
  -116,145
Cash from investing activities, $m
  -57,110
  -62,552
  -68,156
  -73,927
  -79,865
  -85,980
  -92,280
  -98,778
  -105,486
  -112,418
  -119,593
  -127,028
  -134,739
  -142,750
  -151,077
  -159,744
  -168,773
  -178,186
  -188,008
  -198,263
  -208,977
  -220,177
  -231,889
  -244,144
  -256,971
  -270,402
  -284,469
  -299,207
  -314,651
  -330,839
Free cash flow, $m
  1,398
  2,266
  2,955
  3,632
  4,221
  4,827
  5,453
  6,099
  6,767
  7,458
  8,174
  8,917
  9,689
  10,492
  11,328
  12,199
  13,108
  14,058
  15,050
  16,087
  17,173
  18,309
  19,500
  20,748
  22,056
  23,427
  24,866
  26,376
  27,960
  29,624
Issuance/(repayment) of debt, $m
  894
  5,001
  5,298
  5,589
  5,875
  6,157
  6,438
  6,718
  7,001
  7,287
  7,579
  7,878
  8,188
  8,508
  8,842
  9,191
  9,556
  9,940
  10,343
  10,768
  11,215
  11,687
  12,184
  12,709
  13,263
  13,847
  14,464
  15,114
  15,799
  16,522
Issuance/(repurchase) of shares, $m
  5,902
  1,449
  981
  520
  144
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  6,796
  6,450
  6,279
  6,109
  6,019
  6,157
  6,438
  6,718
  7,001
  7,287
  7,579
  7,878
  8,188
  8,508
  8,842
  9,191
  9,556
  9,940
  10,343
  10,768
  11,215
  11,687
  12,184
  12,709
  13,263
  13,847
  14,464
  15,114
  15,799
  16,522
Total cash flow (excl. dividends), $m
  8,194
  8,716
  9,234
  9,741
  10,240
  10,984
  11,891
  12,817
  13,767
  14,745
  15,753
  16,796
  17,877
  19,000
  20,170
  21,390
  22,665
  23,997
  25,393
  26,855
  28,388
  29,996
  31,684
  33,457
  35,319
  37,275
  39,330
  41,490
  43,760
  46,146
Retained Cash Flow (-), $m
  -5,902
  -1,449
  -981
  -621
  -653
  -684
  -715
  -746
  -778
  -810
  -842
  -875
  -910
  -945
  -982
  -1,021
  -1,062
  -1,104
  -1,149
  -1,196
  -1,246
  -1,299
  -1,354
  -1,412
  -1,474
  -1,539
  -1,607
  -1,679
  -1,755
  -1,836
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  85
  96
  108
  122
  135
  150
  165
  181
  197
  215
  233
  251
  271
  291
  312
  334
  356
  380
  405
  430
  457
  484
  513
  543
  575
  607
  641
  677
  714
  753
Cash available for distribution, $m
  2,292
  7,267
  8,253
  9,120
  9,587
  10,300
  11,175
  12,071
  12,990
  13,935
  14,911
  15,920
  16,967
  18,055
  19,188
  20,369
  21,603
  22,893
  24,243
  25,658
  27,142
  28,697
  30,330
  32,045
  33,845
  35,736
  37,723
  39,810
  42,004
  44,310
Discount rate, %
  11.30
  11.87
  12.46
  13.08
  13.74
  14.42
  15.14
  15.90
  16.70
  17.53
  18.41
  19.33
  20.29
  21.31
  22.37
  23.49
  24.67
  25.90
  27.19
  28.55
  29.98
  31.48
  33.06
  34.71
  36.44
  38.27
  40.18
  42.19
  44.30
  46.51
PV of cash for distribution, $m
  2,059
  5,807
  5,803
  5,578
  5,037
  4,590
  4,165
  3,707
  3,237
  2,771
  2,325
  1,910
  1,536
  1,208
  928
  696
  509
  362
  251
  169
  110
  70
  43
  25
  14
  8
  4
  2
  1
  0
Current shareholders' claim on cash, %
  50.0
  37.5
  31.2
  28.5
  27.8
  27.8
  27.8
  27.8
  27.8
  27.8
  27.8
  27.8
  27.8
  27.8
  27.8
  27.8
  27.8
  27.8
  27.8
  27.8
  27.8
  27.8
  27.8
  27.8
  27.8
  27.8
  27.8
  27.8
  27.8
  27.8

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.

FINANCIAL RATIOS  of  Principal Financial Group (PFG)

Valuation Ratios
P/E Ratio 12.1
Price to Sales 1.3
Price to Book 1.6
Price to Tangible Book
Price to Cash Flow 4.1
Price to Free Cash Flow 4.3
Growth Rates
Sales Growth Rate 4.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 14%
Cap. Spend. - 3 Yr. Gr. Rate 21.3%
Financial Strength
Quick Ratio 0
Current Ratio NaN
LT Debt to Equity 30.6%
Total Debt to Equity 31.1%
Interest Coverage 11
Management Effectiveness
Return On Assets 0.7%
Ret/ On Assets - 3 Yr. Avg. 0.6%
Return On Total Capital 10.1%
Ret/ On T. Cap. - 3 Yr. Avg. 9.6%
Return On Equity 13.5%
Return On Equity - 3 Yr. Avg. 12.6%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 17.8%
EBITDA Margin - 3 Yr. Avg. 18.5%
Operating Margin 12.7%
Oper. Margin - 3 Yr. Avg. 12.9%
Pre-Tax Margin 12.7%
Pre-Tax Margin - 3 Yr. Avg. 12.9%
Net Profit Margin 10.5%
Net Profit Margin - 3 Yr. Avg. 10.6%
Effective Tax Rate 14.4%
Eff/ Tax Rate - 3 Yr. Avg. 16.1%
Payout Ratio 35.3%

PFG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PFG stock intrinsic value calculation we used $14093 million for the last fiscal year's total revenue generated by Principal Financial Group. The default revenue input number comes from 2017 income statement of Principal Financial Group. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our PFG stock valuation model: a) initial revenue growth rate of 13.7% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 11.3%, whose default value for PFG is calculated based on our internal credit rating of Principal Financial Group, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Principal Financial Group.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of PFG stock the variable cost ratio is equal to 61.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $3298 million in the base year in the intrinsic value calculation for PFG stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Principal Financial Group.

Corporate tax rate of 27% is the nominal tax rate for Principal Financial Group. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the PFG stock is equal to 0.6%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for PFG are equal to 1709.9%.

Life of production assets of 10 years is the average useful life of capital assets used in Principal Financial Group operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for PFG is equal to -1692.6%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $0 million for Principal Financial Group - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 289 million for Principal Financial Group is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Principal Financial Group at the current share price and the inputted number of shares is $16.0 billion.

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COMPANY NEWS

▶ Principal Financial: 2Q Earnings Snapshot   [Jul-26-18 04:48PM  Associated Press]
▶ Principal to Announce Second Quarter 2018 Financial Results   [Jul-05-18 06:07PM  Business Wire]
▶ Exclusive: Amazon inks new Nashville lease   [Jun-06-18 12:45PM  American City Business Journals]
▶ [$$] Insurer Principal Financial to Buy Fintech Firm   [May-30-18 03:48PM  The Wall Street Journal]
▶ Principal Names New Chief Human Resources Officer   [May-02-18 05:00PM  Business Wire]
▶ Principal Expands Financial Wellness Resources   [May-01-18 02:24PM  Business Wire]
▶ Principal Financial: 1Q Earnings Snapshot   [Apr-26-18 05:09PM  Associated Press]
▶ SEC proposes new standard of conduct rules for brokers   [Apr-18-18 05:31PM  MarketWatch]
▶ Principal to Announce First Quarter 2018 Financial Results   [Apr-02-18 11:00AM  Business Wire]
▶ Principal a Top Company for Executive Women   [Mar-06-18 10:00AM  Business Wire]
▶ Principal Appoints New Head of Full Service Retirement   [Feb-28-18 08:00AM  Business Wire]
▶ Dividend Stocks Investors Love   [Feb-21-18 08:02AM  Simply Wall St.]
▶ 12 Stocks To Buy For Market's Upturn: Goldman Sachs   [Feb-12-18 02:00PM  Investopedia]
▶ Principal to Host Investor Event in Tokyo on Sept. 28, 2018   [Feb-07-18 09:00AM  Business Wire]
▶ Principal Financial misses 4Q profit forecasts   [Jan-29-18 04:51PM  Associated Press]
▶ How Wall Street Analysts View Chubb Limited   [Jan-18-18 10:30AM  Market Realist]
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▶ What to Expect from Chubb in 4Q17   [Jan-15-18 05:15PM  Market Realist]
▶ Analyzing Chubbs Total Revenues in 9M17   [03:41PM  Market Realist]
▶ Opening Bell, January 9, 2018   [Jan-09-18 09:29AM  CNBC Videos]
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