Financial Review: Principal Financial Group (NASDAQ:PFG) & Lemonade (NYSE:LMND)

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

Volatility & Risk

Principal Financial Group has a beta of 0.87, suggesting that its share price is 13% less volatile than the S&P 500. Comparatively, Lemonade has a beta of 2.12, suggesting that its share price is 112% more volatile than the S&P 500.

Earnings & Valuation

This table compares Principal Financial Group and Lemonade”s 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	1.22	$1.19 billion	$5.27	16.65
Lemonade	$737.90 million	6.78	-$165.50 million	($2.26)	-28.97

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

Analyst Recommendations

This is a summary of current ratings for Principal Financial Group and Lemonade, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Principal Financial Group	1	7	2	0	2.10
Lemonade	3	1	5	0	2.22

Principal Financial Group presently has a consensus target price of $94.11, suggesting a potential upside of 7.29%. Lemonade has a consensus target price of $68.75, suggesting a potential upside of 5.02%. Given Principal Financial Group’s higher possible upside, equities analysts clearly believe Principal Financial Group is more favorable than Lemonade.

Institutional & Insider Ownership

75.1% of Principal Financial Group shares are held by institutional investors. Comparatively, 80.3% of Lemonade shares are held by institutional investors. 1.1% of Principal Financial Group shares are held by company insiders. Comparatively, 12.5% of Lemonade shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares Principal Financial Group and Lemonade’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%
Lemonade	-22.43%	-31.19%	-8.67%

Summary

Principal Financial Group beats Lemonade on 8 of the 14 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 Lemonade

Lemonade, Inc. provides various insurance products through various channels in the United States, Europe, and the United Kingdom. Its insurance products include stolen or damaged property, and personal liability that protects its customers if they are responsible for an accident or damage to another person or their property. The company also offers renters, homeowners, car, pet, and life insurance products, as well as landlord insurance policies. In addition, it operates as an agent for other insurance companies. The company was formerly known as Lemonade Group, Inc. and changed its name to Lemonade, Inc. Lemonade, Inc. was incorporated in 2015 and is headquartered in New York, New York.