Back to top

Analyst Blog

On Apr 22, we reiterated our Neutral recommendation on Lincoln National Corp. (LNC - Analyst Report) based on its enhanced revenue on the back of improved distribution expansion and pricing. However, higher expenses and lower operating cash flow raise caution for this Zacks Rank #3 (Hold) stock.

Why the Retention?

Estimates for this life insurer witnessed minor corrections since the company reported its fourth-quarter 2012 results on Feb 6. Lincoln’s fourth-quarter earnings of $1.10 per share and total revenue of $2.96 billion topped the Zacks Consensus Estimate of $1.06 and $2.87 billion, respectively. Operating earnings and revenue also came in higher than the prior-year quarter.

Results were primarily driven by a diversified product portfolio as well as improved sales, retention and pricing that led to enhanced deposits, net inflows, ending account balances and book value. Improved financial leverage also enhances capitalization, mitigates balance sheet risks and provides liquidity cushion for long-term investment.

However, higher benefits and commission expenses, economic volatility, competitive pressures and a low interest rate environment have been restricting desired investment income growth. Going ahead, the company is poised to consistently return incremental capital to its shareholders, as reflected by the consistent dividend hike, strong capital leverage and sound ratings.

Overall, Lincoln delivered positive earnings surprises in all of the last 4 quarters with an average beat of 7.9%. Following the release of the fourth-quarter results, the Zacks Consensus Estimate for 2013 inched up 1.8% to $4.55 per share in the last 60 days. Further, the Zacks Consensus Estimate for 2014 edged up 2.1% to $4.93 per share in the last 60 days.

Other Insurers That Warrant a Look

While Lincoln tends to stay in the neutral lane in the near term, other stocks in the insurance sector that are outperforming include Montpelier Re Ltd. (MRH - Analyst Report), EMC Insurance Group Inc. (EMCI - Snapshot Report) and Hilltop Holdings Inc. (HTH - Analyst Report). All these stocks carry a Zacks Rank #1 (Strong Buy).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
SIGNET JEWE… SIG 116.37 +7.72%
CHYRONHEGO… CHYR 2.72 +5.84%
US SILICA H… SLCA 70.72 +4.00%
MALLINCKROD… MNK 80.11 +2.32%
RF MICRO DE… RFMD 11.76 +2.31%