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Will Low Rates Dent Lincoln National (LNC) Q3 Earnings?

Lincoln National CorporationLNC is set to report third-quarter 2015 results on Oct 28, after market close.

The company posted a negative earnings surprise of 5.2% last quarter and positive earnings surprises in two out of the four quarters. The average beat for the trailing four quarters is 2.03%.

Let's see how things are shaping up for this announcement.

Factors Influencing This Past Quarter

Lincoln National is one of the 10 largest life insurers in the U.S. and a leading writer of both variable annuities and individual life. Together these two product lines account for over 90% of the company's earnings. This concentration has made it one of the most sensitive among its peers to low long-term interest rates, which have heightened challenges from large legacy Universal Life and Variable Annuity blocks and limited Lincoln National's return on equity.

Results will reflect the balance sheet's above average sensitivity to equity markets and interest rates.

Lincoln National continues to face earnings headwinds from low interest rates as net investment income represents approximately 35% of total operating revenues.

The company's Group Insurance business will see a strain in sales since the pricing actions continue to put downward pressure on new business opportunities.

Another challenge facing earnings is a competitive product marketplace.

Earnings Whispers

Our proven model does not conclusively show that Lincoln National is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: Lincoln National has an Earnings ESP of 0.00% as the Most Accurate estimate of $1.52 is in line with the Zacks Consensus Estimate.

Zacks Rank: Lincoln National has a Zacks Rank #4 (Sell). As it is the company does not have a positive Earnings ESP, on top of that we caution against s tocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when it is seeing negative estimate revisions.

Stocks to Consider

Here are some companies you may want to consider as these have the right combination of elements to post an earnings beat this quarter:

Assurant Inc. AIZ has an Earnings ESP of +3.27% and a Zacks Rank #3 (Hold). The company will release third-quarter earnings results on Oct 27.

Arch Capital Group Ltd. ACGL has an Earnings ESP of +1.02% and a Zacks Rank #2 (Buy). Third-quarter earnings results are expected on Oct 28.

RenaissanceRe Holdings Ltd. RNR has an Earnings ESP of +3.68% and a Zacks Rank #1 (Strong Buy). It will release third-quarter earnings results on Nov 4.

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ASSURANT INC (AIZ): Free Stock Analysis Report

LINCOLN NATL-IN (LNC): Free Stock Analysis Report

RENAISSANCERE (RNR): Free Stock Analysis Report

ARCH CAP GP LTD (ACGL): Free Stock Analysis Report

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


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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