Shares of Principal Financial Group closed sharply lower Friday in the first trading session after the investment and benefits company reported first-quarter results that fell well short of analysts’ expectations.
The stock dropped $1.50, or 5.1 percent, to end the week at $27.69. Trading Friday was nearly three times normal volume.
Des Moines, Iowa-based Principal said late Thursday that its net income in the three months ended March 31 rose to $201.5 million, or 66 cents per share. That compared with $182 million, or 56 cents per share, in the same period a year earlier.
Revenue rose three percent, to $2.11 billion from $2.05 billion.
Adjusted for one-time items such as losses on investments, Principal earned 70 cents per share.
The results fell short of Wall Street analysts’ projections. On average, they expected adjusted earnings of 74 cents per share, on revenue of $2.12 billion, according to data provider FactSet.
Analysts paid close attention to the results from Principal’s big Full Service Accumulation segment, which offers retirement plans and similar products. Revenue in the division fell, hurt by lower investment income. Costs were about flat.
Analysts John Nadel and Alex Levine with brokerage Sterne Agee said the results in Principal’s Global and Specialty Benefits units also fell short. The performance of those units overshadowed a quarter with “exceptional” inflows to its funds, they said.
Principal reported an 11 percent jump in assets under management, to $364.1 billion.
The Sterne, Agee analysts cut their price target on the stock to $34 from $36. They also reduced earnings estimates for this year and next year to $3.02 and $3.40 per share, respectively; from $3.16 and $3.58 per share. On average, analysts now expect Principal to generate adjusted earnings of $3.15 in 2012 and $3.56 in 2012.
Principal offers a range of savings, investment, and insurance products and services for retirees and others. Its retirement segment manages pension plans, defined-contribution retirement plans, executive benefit plans and employee stock ownership plans. It also sells annuities, mutual funds and bank products and services to the employees of its corporate clients.
The company’s global investors segment sells equity, fixed income, and real estate investments. Its international division offers retirement products and services, annuities, mutual funds, institutional asset management, and life insurance products in Brazil, Chile, China, Hong Kong, India, Mexico, and southeast Asia.
Principal’s stock was the sixth-biggest decliner on a percentage basis in the Standard & Poor’s 500 index Friday.
Still, the stock is near the middle of its recent range. Over the past 52 weeks, Principal has traded as low as $20.48 and as high as $35.