Lincoln National Corporation (LNC – Free Report) is aided by robust Annuities and Group Protection segment performance, strategic product shifts, expense management, technology adoption and a solid financial foundation.
LNC’s Zacks Rank & Price Performance
Lincoln National currently carries a Zacks Rank #2 (Buy).
The stock has gained 16.7% in the past year.
Image Source: Zacks Investment Research
Lincoln National’s Favorable Style Score
LNC carries an impressive Value Score of A. Value Score helps find stocks that are undervalued. Back-tested results have shown so far that stocks with a favorable Value Score in combination with a solid Zacks Rank are the best investment bets.
LNC’s Robust Prospects
The Zacks Consensus Estimate for Lincoln National’s 2024 earnings is pegged at $6.98 per share, indicating a year-over-year improvement of 33.7%. The consensus mark for revenues is pegged at $18.4 billion, implying a year-over-year increase of 14.8%.
The consensus estimate for 2025 earnings is pegged at $7.61 per share, indicating an increase of 9% from the 2024 estimate. The consensus estimate for revenues is pegged at $19.2 billion, implying 4.3% growth from the 2024 estimate.
Lincoln National’s Impressive Earnings Surprise History
LNC’s bottom line outpaced estimates in each of the trailing four quarters, the average surprise being 15.85%.
LNC’s Valuation
Price-to-book (P/B) is one of the multiples used for valuing insurance stocks. Compared with the life insurance industry’s trailing 12-month P/B ratio of 1.96, Lincoln National has a reading of 0.67. It is quite evident that the stock is currently undervalued.
LNC’s Solid Return on Equity
Return on equity in the trailing 12 months is currently 18.2% for LNC, which is higher than the industry’s average of 15.5%. This substantiates the company’s efficiency in utilizing shareholders’ funds.
Lincoln National’s Key Business Tailwinds
Lincoln National’s revenues are poised for growth, driven by the robust performance of its Annuities and Group Protection segments, alongside higher fee income from variable annuities. In the Annuities segment, growth has been fueled by increased account values and improved spread income.
Notable products such as the Lincoln Investor Advantage, Lincoln Level Advantage indexed variable annuity and Lincoln ChoicePlus have significantly contributed to this success. Similarly, the Group Protection unit is benefiting from expanded scale, broader distribution networks and strategic acquisitions, leading to a 28.7% year-over-year increase in operating income during the first nine months of 2024.
With expertise in retirement planning, insurance and wealth protection, Lincoln National serves around 17 million customers, positioning it for sustained sales growth. The business is also focused on shifting its product mix toward offerings without long-term guarantees, thereby reducing sensitivity to interest rate fluctuations. In addition, ongoing expense management initiatives have supported margin improvements while the adoption of advanced technologies has enhanced operational efficiency and customer experience.
Lincoln National maintains a solid financial foundation, bolstered by a rising cash balance and declining debt levels. As of Sept. 30, 2024, cash and invested cash was $6 billion, which soared 78.7% from the 2023-end level. This strong financial position enables the company to pursue growth opportunities and strategically distribute capital. Its dividend yield of 5.7% remains higher than the industry’s average of 3.2%.
Other Stocks to Consider
Some other top-ranked stocks in the insurance space are The Allstate Corporation (ALL – Free Report) , Mercury General Corporation (MCY – Free Report) and ProAssurance Corporation (PRA – Free Report) , each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Allstate’s earnings surpassed estimates in each of the last four quarters, the average surprise being 135.21%. The Zacks Consensus Estimate for ALL’s 2024 earnings is pegged at $16.27 per share, which has increased more than 17-fold from the prior-year reported figure. The consensus mark for revenues indicates a rise of 12.1% from the year-ago actual. The consensus mark for ALL’s 2024 earnings has moved 1.2% north in the past 30 days.
Mercury General’s earnings beat estimates in each of the trailing four quarters, the average surprise being 694.28%. The Zacks Consensus Estimate for MCY’s 2024 earnings is pegged at $6.35 per share, which has increased more than 21-fold from the prior-year reported figure. The consensus estimate for revenues implies an improvement of 18.2% from the year-ago actual. The consensus mark for MCY’s 2024 earnings has moved 58.8% north in the past 60 days.
The bottom line of ProAssurance outpaced estimates in three of the trailing four quarters and missed the mark once, the average surprise being 61.46%. The Zacks Consensus Estimate for PRA’s 2024 earnings is pegged at 80 cents per share. A loss of 14 cents per share was incurred in the prior year. The consensus mark for PRA’s 2024 earnings has moved 5.3% north in the past 30 days.
Shares of Allstate, Mercury General and ProAssurance have gained 41.1%, 80% and 12.9%, respectively, in the past year.
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