Financial Analysis: SelectQuote (NYSE:SLQT) and Principal Financial Group (NASDAQ:PFG)

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

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Principal Financial Group and SelectQuote, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Principal Financial Group	1	7	2	0	2.10
SelectQuote	1	2	0	1	2.25

Principal Financial Group presently has a consensus price target of $93.44, indicating a potential downside of 2.83%. SelectQuote has a consensus price target of $2.92, indicating a potential upside of 276.83%. Given SelectQuote’s stronger consensus rating and higher probable upside, analysts plainly believe SelectQuote is more favorable than Principal Financial Group.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Principal Financial Group	7.58%	16.09%	0.57%
SelectQuote	4.80%	14.85%	3.97%

Insider & Institutional Ownership

75.1% of Principal Financial Group shares are owned by institutional investors. Comparatively, 34.6% of SelectQuote shares are owned by institutional investors. 1.1% of Principal Financial Group shares are owned by company insiders. Comparatively, 13.1% of SelectQuote shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Principal Financial Group and SelectQuote”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Principal Financial Group	$15.63 billion	1.33	$1.19 billion	$5.27	18.25
SelectQuote	$1.53 billion	0.09	$47.58 million	$0.01	77.40

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

Risk & Volatility

Principal Financial Group has a beta of 0.87, suggesting that its stock price is 13% less volatile than the S&P 500. Comparatively, SelectQuote has a beta of 1.36, suggesting that its stock price is 36% more volatile than the S&P 500.

Summary

Principal Financial Group beats SelectQuote on 8 of the 15 factors compared between 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 SelectQuote

SelectQuote, Inc. operates a technology-enabled, direct-to-consumer distribution platform that sells a range of insurance products and healthcare services in the United States. The company operates through three segments: Senior; Life; and Auto & Home. It distributes senior health policies, such as medicare advantage, medicare supplement, medicare part D, and other ancillary senior health insurance related products, including prescription drugs, dental, vision, and hearing plans; life insurance products, such as term life, final expense, and other ancillary products, including critical illness, accidental death, and juvenile insurance; homeowners, auto, dwelling fire, and other ancillary insurance products; and non-commercial auto and home property, and casualty policies. The company also provides SelectRx, an accredited patient-centered pharmacy home pharmacy, which offers essential prescription medications, OTC medications, customized medication packaging, medication therapy management, and long-term pharmacy care; and population health that helps members understand the benefits available under their health plans, and contracts with insurance carriers. SelectQuote, Inc. was incorporated in 1999 and is headquartered in Overland Park, Kansas.