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Lincoln National (LNC) Down 3.7% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Lincoln National (LNC - Free Report) . Shares have lost about 3.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Lincoln National due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Lincoln National Q4 Earnings Miss on Higher Benefits Costs
Lincoln National Corporation reported fourth-quarter 2021 adjusted earnings of $1.56 per share, which missed the Zacks Consensus Estimate of $1.98. Also, the bottom line declined from the prior-year figure of $1.78 per share. The profits were affected by increased costs and expenses and lower returns from its alternative investment portfolio in the Life Insurance business.
Adjusted operating revenues increased to $4,769 million for the fourth quarter from $4,655 million a year ago. Also, it beat the consensus mark of $4,687 million. Factors like growing sales, pricing discipline and solid equity market performance benefited the top line.
Costs and Expenses
Total expenses of $4,367 million increased from $4,046 million a year ago, primarily due to higher costs related to benefits, Spark, strategic digitization, and commissions and other. Benefits constitute 51.5% of total expenses.
Segmental Performance
The Annuities segment’s operating income soared to $332 million for the fourth quarter from $289 million a year ago, courtesy of solid equity market performance that paved the way for increased account values. Operating revenues advanced to $1,282 million from $1,163 million in the year-ago period. Total annuity deposits increased 20% year over year to $3,011 million.
The Retirement Plan Services segment reported an operating income of $57 million, which climbed 16.3% year over year. The upside can be attributed to increased account values stemming from robust equity market performance, strong returns from the company’s alternative investment portfolio and consistent expense efficiency. Operating revenues of $335 million rose 3.7% year over year. Total deposits of $3,000 million inched up 17.3% year over year for the quarter under review.
Operating income in the Life Insurance segment amounted to $80 million, down from the prior-year quarter’s $144 million. The decline was caused by lower returns from the alternative investment portfolio. Operating revenues declined 4.4% year over year to $1,844 million. Total Life Insurance sales, however, increased 120.9% year over year to $254 million for the fourth quarter, thanks to the rising sales across all key products.
The Group Protection segment incurred a loss from operations of $115 million, wider than the prior-year loss of $42 million. The results were hurt by elevated mortality and morbidity impacts stemming from the pandemic. Operating revenues of $1,252 million grew 5.7% year over year. Insurance premiums rose 6.5% year over year to $1,117 million. Total sales, however, dipped 14.4% year over year to $385 million for the quarter under review.
Financial Update (as of Dec 31, 2021)
Lincoln National exited the fourth quarter with cash and invested cash of $2,612 million, which increased 52.9% year over year. Total assets of $387.3 billion also increased 5.8% year over year.
Long-term debt at quarter-end amounted to $6,325 million, down 5.3% year over year. Short-term debt was $300 million. As of Feb 2, 2022, its senior debt received ‘A-‘ and ‘BBB+’ ratings from Standard & Poor’s and Fitch, respectively. Shareholders’ equity declined 10.7% year over year to $20,272 million.
Book value per share, excluding accumulated other comprehensive income (AOCI), increased 9% year over year to $78.05.
Adjusted operating return on equity excluding AOCI came in at 8.1% compared with the year-ago figure of 10.1%.
Cash Returned to Shareholders
Lincoln National bought back shares worth $650 million in the fourth quarter. Also, it paid out $78 million in common dividends. Via an accelerated share buyback program, the company used $500 million from its block reinsurance transaction.
Outlook
Even though the ongoing pandemic is likely to continue hurting the company’s results, it is expected to witness rising earnings per share on the back of its Spark Initiative.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
Currently, Lincoln National has an average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Lincoln National has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Lincoln National (LNC) Down 3.7% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Lincoln National (LNC - Free Report) . Shares have lost about 3.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Lincoln National due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Lincoln National Q4 Earnings Miss on Higher Benefits Costs
Lincoln National Corporation reported fourth-quarter 2021 adjusted earnings of $1.56 per share, which missed the Zacks Consensus Estimate of $1.98. Also, the bottom line declined from the prior-year figure of $1.78 per share. The profits were affected by increased costs and expenses and lower returns from its alternative investment portfolio in the Life Insurance business.
Adjusted operating revenues increased to $4,769 million for the fourth quarter from $4,655 million a year ago. Also, it beat the consensus mark of $4,687 million. Factors like growing sales, pricing discipline and solid equity market performance benefited the top line.
Costs and Expenses
Total expenses of $4,367 million increased from $4,046 million a year ago, primarily due to higher costs related to benefits, Spark, strategic digitization, and commissions and other. Benefits constitute 51.5% of total expenses.
Segmental Performance
The Annuities segment’s operating income soared to $332 million for the fourth quarter from $289 million a year ago, courtesy of solid equity market performance that paved the way for increased account values. Operating revenues advanced to $1,282 million from $1,163 million in the year-ago period. Total annuity deposits increased 20% year over year to $3,011 million.
The Retirement Plan Services segment reported an operating income of $57 million, which climbed 16.3% year over year. The upside can be attributed to increased account values stemming from robust equity market performance, strong returns from the company’s alternative investment portfolio and consistent expense efficiency. Operating revenues of $335 million rose 3.7% year over year. Total deposits of $3,000 million inched up 17.3% year over year for the quarter under review.
Operating income in the Life Insurance segment amounted to $80 million, down from the prior-year quarter’s $144 million. The decline was caused by lower returns from the alternative investment portfolio. Operating revenues declined 4.4% year over year to $1,844 million. Total Life Insurance sales, however, increased 120.9% year over year to $254 million for the fourth quarter, thanks to the rising sales across all key products.
The Group Protection segment incurred a loss from operations of $115 million, wider than the prior-year loss of $42 million. The results were hurt by elevated mortality and morbidity impacts stemming from the pandemic. Operating revenues of $1,252 million grew 5.7% year over year. Insurance premiums rose 6.5% year over year to $1,117 million. Total sales, however, dipped 14.4% year over year to $385 million for the quarter under review.
Financial Update (as of Dec 31, 2021)
Lincoln National exited the fourth quarter with cash and invested cash of $2,612 million, which increased 52.9% year over year. Total assets of $387.3 billion also increased 5.8% year over year.
Long-term debt at quarter-end amounted to $6,325 million, down 5.3% year over year. Short-term debt was $300 million. As of Feb 2, 2022, its senior debt received ‘A-‘ and ‘BBB+’ ratings from Standard & Poor’s and Fitch, respectively. Shareholders’ equity declined 10.7% year over year to $20,272 million.
Book value per share, excluding accumulated other comprehensive income (AOCI), increased 9% year over year to $78.05.
Adjusted operating return on equity excluding AOCI came in at 8.1% compared with the year-ago figure of 10.1%.
Cash Returned to Shareholders
Lincoln National bought back shares worth $650 million in the fourth quarter. Also, it paid out $78 million in common dividends. Via an accelerated share buyback program, the company used $500 million from its block reinsurance transaction.
Outlook
Even though the ongoing pandemic is likely to continue hurting the company’s results, it is expected to witness rising earnings per share on the back of its Spark Initiative.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
Currently, Lincoln National has an average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Lincoln National has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.