Lincoln National Corporation LNC has been benefiting from a strong Group Protection segment, improved fee income, changes in the business mix, cost-curbing efforts and a robust financial position.
LNC’s Zacks Rank & Price Performance
Lincoln National carries a Zacks Rank #3 (Hold) at present.
The stock has gained 14.1% in the past year.
Image Source: Zacks Investment Research
Robust Growth Prospects of LNC Stock
The Zacks Consensus Estimate for Lincoln National’s 2024 earnings is pegged at $5.74 per share, which indicates an improvement of 10% from the 2023 figure. The consensus mark for revenues is $18.4 billion, implying a rise of 15% from the 2023 figure.
The consensus mark for 2025 earnings is pegged at $7.54 per share, indicating an improvement of 31.3% from the 2024 estimate. The estimate for revenues is $19.1 billion, implying a 3.5% increase from the 2024 estimate.
Solid Return on Equity of LNC
Return on equity in the trailing 12 months is currently 17.1%, which is higher than the industry’s average of 15.5%. This substantiates the company’s efficiency in utilizing shareholders’ funds.
Lincoln National’s Business Tailwinds
Lincoln National's revenues are likely to be bolstered by the strong performance of its Annuities and Group Protection segments, along with higher fee income from variable annuities in the days ahead.
Increased account values and a well-performing alternative investment portfolio have been driving growth in the Annuities segment, which includes a range of variable and fixed annuities as well as indexed products. Key offerings such as the Lincoln Investor Advantage, Lincoln Level Advantage indexed variable annuity and Lincoln ChoicePlus have contributed to this success. Meanwhile, increased scale, broader distribution channels and acquisitions are expected to boost sales in the Group Protection unit. Operating income in the segment grew 16.7% year over year in the first half of 2024.
With expertise in retirement, insurance and wealth protection, Lincoln National serves around 17 million customers, positioning it well for future sales growth.
Lincoln National is also focused on shifting its business mix toward products without long-term guarantees, which are less sensitive to interest rates. Expense management efforts have further supported margin expansion while the adoption of advanced technologies has enhanced operational scale and improved the customer experience.
The company’s financial position remains strong, supported by a steady rise in cash balance. This financial strength allows Lincoln National to pursue growth initiatives and strategically allocate capital through share repurchases and dividend hikes.
Headwinds for LNC
The Life Insurance segment has faced challenges from elevated mortality and morbidity claims linked to the COVID pandemic, which weighed on earnings. While pandemic-related claims have eased, the segment remains pressured by higher reinsurance costs and margin compression. Life Insurance sales dropped 22.1% year over year in the first half of 2024.
Lincoln National has a debt-laden balance sheet, which induces an increase in interest expenses. Its total debt-to-capital ratio of 43.7% at the second-quarter end was significantly higher than the industry average of 14.5%.
Stocks to Consider
Some better-ranked stocks in the insurance space are Assurant, Inc. AIZ, Brighthouse Financial, Inc. BHF and Primerica, Inc. PRI. Assurant sports a Zacks Rank #1 (Strong Buy), and Brighthouse Financial and Primerica carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Assurant’s earnings surpassed estimates in each of the last four quarters, the average surprise being 33.56%. The Zacks Consensus Estimate for AIZ’s 2024 earnings indicates an improvement of 6.8% from the year-ago figure while the estimate for revenues implies growth of 4.9%. The consensus mark for 2024 earnings has moved 0.6% north in the past 30 days.
The bottom line of Brighthouse Financial outpaced earnings estimates in three of the last four quarters and missed once, the average surprise being 3.76%. The Zacks Consensus Estimate for BHF’s 2024 earnings indicates an improvement of 29.8% from the year-ago figure while the estimate for revenues implies growth of 3.8%. The consensus mark for 2024 earnings has moved 1.7% north in the past 30 days.
Primerica’s earnings surpassed estimates in two of the trailing four quarters and missed the mark twice, the average surprise being 1.74%. The Zacks Consensus Estimate for PRI’s 2024 earnings indicates a rise of 11.7% year over year while the estimate for revenues implies an improvement of 5.7%. The consensus mark for 2024 earnings has moved 0.2% north in the past 30 days.
Shares of Assurant, Brighthouse Financial and Primerica have gained 43.7%, 36.5% and 5.3%, respectively, in the past year.
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Assurant, Inc. (AIZ) : Free Stock Analysis Report
Primerica, Inc. (PRI) : Free Stock Analysis Report
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