Back to top

Will Lincoln National (LNC) Beat on Q2 Earnings This Season?

Read MoreHide Full Article

Lincoln National Corporation (LNC - Free Report) is set to report second-quarter 2014 earnings results on Jul 30, 2014. Last quarter, it posted a positive earnings surprise of 3.88%. Let's see how things are shaping up for this announcement.

Factors Affecting the Past Quarter

Lincoln National has taken up a number of initiatives in the last quarter that should help the company to increase earnings. These include the launch of Presidential® Managed Risk Moderate Fund, a motor vehicle accident insurance policy and a variable annuity product Lincoln Investor AdvantageSM.

Moreover, the company’s board of directors increased its share repurchase authorization to enhance shareholders’ worth and reduce share count thereby, boosting earnings. However, the global market crisis is impacting Lincoln National’s investment returns.  

Moreover, despite the initiatives and investments made toward business restructuring, we remain skeptical of top-line improvement for Lincoln National due to low demand, reduced client activity and pricing pressure. In addition, decline in client retention is expected to weigh on the company’s earnings during the quarter.

Earnings Whispers?

Our proven model does not conclusively show that Lincoln National is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) 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 ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate both stand at $1.37 per share, making the difference 0.00%.

Zacks Rank: Lincoln National’s Zacks Rank #2 (Buy) increases the predictive power of ESP, but when combined with a zero ESP, it makes surprise prediction difficult.

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some insurers you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:  

Voya Financial, Inc. (VOYA - Free Report) has Earnings ESP of +2.86 and a Zacks Rank #2 (Buy).

Aflac Inc. (AFL - Free Report) has Earnings ESP of +0.63% and a Zacks Rank #2.

Cigna Corp. (CI - Free Report) has Earnings ESP of +2.16% and a Zacks Rank #3 (Hold).

More from Zacks Analyst Blog

You May Like