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Lincoln National (LNC) Up 45.4% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Lincoln National (LNC - Free Report) . Shares have added about 45.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Lincoln National due for a pullback? 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 drivers.

Lincoln National Incurs Q3 Loss, Beats on Revenues

Lincoln National incurred third-quarter 2020 loss of 72 cents per share. The Zacks Consensus Estimate was of earnings of $2.16 per share. Further, the bottom line tumbled from the year-ago quarter’s earnings of $2.22. Third-quarter results were impacted by an elevated claims experience from COVID-19.

Adjusted operating revenues of $4.8 billion, however, increased 3.2% year over year. The top line also beat the consensus mark by 1% on the back of the company’s Retirement Plan Services segment.

Total expenses inched up 0.3% year over year to $4.9 billion, primarily due to higher interest and commissions, and other expenses. Net investment income increased 18.1% year over year to $1.45 billion.

Segmental Performance

Operating income in the Annuities segment was up 16% year over year to $196 million. Revenues of $1.04 billion inched up 0.8% year over year. Total annuity deposits plunged 27% to $2.5 billion from the year-ago quarter.

Operating income in Retirement Plan Services rose 14% year over year to $50 million owing to favorable returns within its alternative investment portfolio and a disciplined expense management. Revenues of $311 million climbed 4.4% year over year. Total deposits improved 6% year over year to $2.4 billion owing to growth in recurring deposits and strong first-year sales.

Life Insurance segment reported an operating loss of $311 million, wider than the operating loss of $245 million in the year-ago quarter. Moreover, operating revenues in this segment increased 1.4% year over year to $2.1 billion.

Operating income in Group Protection slumped 90.2% year over year to $6 million.  Operating revenues were up 4.4% year over year to $1.1 billion, courtesy of higher sales.

Share Repurchase Update

Lincoln National’s management hiked its quarterly dividend to 42 cents per share, reflecting a 5% increase from the last dividend. The meatier dividend is payable Feb 1, 2021 to its shareholders of record on Jan 11, 2021. The company didn’t repurchase shares in the quarter under review.

Financial Update (as of Sep 30, 2020)

Lincoln National’s book value per share excluding accumulated other comprehensive income inched up 3% year over year to $71.10. Adjusted operating return on equity (ROE) excluding accumulated other comprehensive income and goodwill stands at -3.9% compared with the year-ago quarter’s figure of -1.3%.

The company ended the quarter with long-term debt of $6.7 billion, up 10.6% year over year. As of Sep 30, 2020, the company had assets worth $347.8 billion, up 6.9% from the year-ago quarter’s number. Shareholders’ equity increased 7.8% year over year to $21.5 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -9.05% due to these changes.

VGM Scores

At this time, Lincoln National has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.


Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Lincoln National has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

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