Back to top

Image: Bigstock

What's in the Cards for Lincoln National's (LNC) Q2 Results?

Read MoreHide Full Article

Lincoln National Corporation (LNC - Free Report) is scheduled to report second-quarter results on Aug 5, after the closing bell. The company is anticipated to register year-over-year decline in both earnings and revenues when it reports quarterly numbers.

In the last reported quarter, Lincoln National’s bottom line surpassed the Zacks Consensus Estimate by 5.2%, led by improved revenues and strong performance at its Annuities, Retirement Plan Services and Life Insurance segments.

Q2 Estimates

The Zacks Consensus Estimate for second-quarter earnings is pegged at $1.52 per, suggesting a decline of 35.6% from the prior-year reported number. The consensus mark for revenues stands at $4.5 billion, indicating a decrease of 0.3% from the year-ago quarter.

Factors to Note

Lincoln National, being a life insurer, is likely to have been affected by the very low interest rate levels due to the COVID-19 pandemic, given their exposure to annuity products that provide guaranteed minimum returns. Lower end-of-period account values might have weighed on the Annuities segment’s second-quarter performance.

The Zacks Consensus Estimate for second-quarter revenues from Annuities segment is pegged at $1.2 billion, suggesting a dip of 0.4% from the prior-year quarter.

Moreover, the company’s Retirement Plan Services segment’s performance is likely to reflect lower end-of-period account values, partially offset by sound expense management and strong recurring deposits. The consensus estimate for second-quarter segmental revenues is pegged at $267 million, indicating a decline of 10.7% from the prior-year quarter.

In the Life Insurance segment, the company expects to witness elevated mortality and morbidity claims related to the pandemic in the to-be-reported quarter. This, in turn, might have dented the company’s second-quarter bottom line. The Zacks Consensus Estimate for second-quarter segmental revenues is pegged at $1.7 billion, suggesting a fall of 5.5% from the prior-year quarter.

Furthermore, sales in the second quarter are likely to have declined as the company resorted to re-pricing its business in order to tide over the difficult operating environment from the COVID-19 fallout and generate increased free cash flows.

Nevertheless, the Group Protection segment may have been benefited from higher premiums, expense efficiencies and buyout of Liberty Mutual group benefits business in the to-be-reported quarter. The consensus estimate for second-quarter revenues from this segment is pegged at $1.2 billion, suggesting growth of 3.8% from the prior-year quarter.

However, Lincoln National estimates higher loss ratios in group disability in the to-be-reported quarter. Temporary haltage of share buybacks due to the COVID-19 induced market volatility is also likely to have impacted the company’s performance in the quarter to be reported.

Earnings Surprise History

The company beat estimates in two of the trailing four quarters and missed the same twice. It has a trailing four-quarter negative earnings surprise of 0.46%, on average.

What the Zacks Model Says

Our proven model predicts an earnings beat for Lincoln National this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Earnings ESP: Lincoln National has an Earnings ESP of +1.87%. This is because the Most Accurate Estimate of $1.55 is pegged higher than the Zacks Consensus Estimate of $1.52.  You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Lincoln National carries a Zacks Rank of 3.

Other Stocks to Consider

Some other stocks worth considering from the insurance industry with an apt combination of elements to surpass estimates this reporting cycle are as follows:

Conifer Holdings, Inc. (CNFR - Free Report) has an Earnings ESP of +68.42% and a Zacks Rank of 3, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

MetLife, Inc. (MET - Free Report) has an Earnings ESP of +1.30% and a Zacks Rank #3.

Sun Life Financial Inc. (SLF - Free Report) has an Earnings ESP of +1.22% and a Zacks Rank #3.

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.

See 8 breakthrough stocks now>>

Published in