Why Lincoln National Stock Lost 19% in August

What happened

Lincoln National (NYSE: LNC) stock trailed the market last month when it shed 19% compared to a 2% decline in the S&P 500 index, according to S&P Global Market Intelligence. The drop sent shares close to the break-even point for the year, before the stock rebounded slightly in early September.

A man signs a check.

Image source: Getty Images.

So what

August's slump came as investors processed the insurance and financial services giant's second-quarter earnings report, released on the last day of July. That announcement showed broad-based growth, with each of Lincoln's four business segments contributing to a 10% overall revenue increase. Key efficiency metrics, including return on equity and operating earnings, rose as well.

Still, investors chose to focus on the potential for lower interest rates and an economic slowdown, hurting Lincoln's earnings strength in the quarters to come, as they did with other bank stocks last month.

Now what

CEO Dennis Glass and his team can't predict when the next recession might hit, but they expressed confidence that Lincoln is positioned well to handle a wide range of borrowing environments, including a return to historically low interest rates. "We regularly stress test equity markets, interest rates, and credit scenarios and are comfortable with our ability to handle significant stressors," he told investors in early August.

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Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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