Lincoln National Corp.LNC is scheduled to report fourth-quarter 2018 results on Feb 6. Per the Zacks Consensus Estimate, the company is expected to earn $2.13 on a per share basis on revenues of $4.1 billion, which translates into year-over-year growth of 7.6% and 8.6%, respectively.
Q4 Earnings Catalysts
The company's Annuities business should gain from higher fee income from account value growth and lower expenses. Total annuity deposits should grow from product and distribution expansion. The company's annuity business is poised to grow on industry-wide factors such as higher interest rates and improved regulatory conditions. Total annuity deposits should increase on the back of growth in variable and fixed annuities owing to product and distribution expansion.
In the company's Life Insurance segment, sales will likely increase led by the roll-out of new products in recent months. The company mentioned that with mortality typically more favorable in the second half of the year, underwriting profit should grow as lower mortality leads to lower claims, which increases underwriting profits.
In Retirement Plan Services segment, total deposits should increase from growth in both first-year sales and recurring deposits. Earnings should gain from a lower tax rate, higher fee income and lower expenses.
The Group Protection business should see an increase in earnings from the acquisition of the Liberty Mutual group benefits business. The Liberty acquisition broadened the company's customer base and distribution access.
The acquisition was accretive to the second and the third quarters and we expect to see the same in the fourth quarter.
Lincoln National boasts a disciplined capital management strategy, which includes share buyback, dividend payouts and selective acquisitions.
Therefore, the bottom line should gain from share repurchases made by the company in the fourth quarter.
The company boasts an attractive earnings surprise history. It beat estimates in three out of the trailing four quarters, delivering an average positive surprise of 1.91%.
Lincoln National Corporation Price and EPS Surprise
Why a Likely Positive Surprise?
Our proven model indicates that chances of Lincoln National beating the Zacks Consensus Estimate are high, as it has the right combination of the two key ingredients - a positive Earnings ESP and a Zacks Rank #3 (Hold) or better. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .
Earnings ESP: The Earnings ESP for Lincoln National is +0.45%.
Zacks Rank: The company currently has a Zacks Rank #3, which increases the predictive power of ESP.
Other Stocks That Warrant a Look
Here are some other companies that you may consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Kinsale Capital Group, Inc. KNSL is set to report fourth-quarter 2018 results on Feb 21. The company has an Earnings ESP of +9.76% and a Zacks Rank #3.
Radian Group Inc. RDN has an Earnings ESP of +3.03% and a Zacks Rank of 1. The company is set to release fourth-quarter earnings on Feb 8.
Ares Capital Corporation ARES has an Earnings ESP of +1.10% and a Zacks Rank of 3. The company is set to release fourth-quarter earnings on Feb 12.
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