Back to top

Image: Bigstock

What's in Store for Lincoln National's (LNC) Q4 Earnings?

Read MoreHide Full Article

Lincoln National Corporation (LNC - Free Report) is slated to report fourth-quarter 2021 results on Feb 2, after the market closes.

Q4 Estimates

The Zacks Consensus Estimate for earnings per share is pegged at $1.98, indicating a rise of 11.2% from the prior-year quarter’s reported figure. The consensus mark for revenues stands at $4.687 billion, which suggests a 0.7% increase from the year-ago quarter’s reported number.

Factors to Note

Lincoln National is set to grow amid favorable conditions. LNC is well-poised for growth owing to product strategy, distribution strength and a diversified portfolio. The COVID-19 pandemic increased the importance of getting life insurance coverage and the improving employment scenario bodes well for LNC’s Group insurance business.

The combination of underlying growth and improving mortality results position Lincoln National well for both its Life Insurance business and Group business.  LNC is likely to gain from its product innovation and digital capabilities as well.

In Lincoln National’s Annuity business, variable annuity sales without guaranteed living benefits are likely to have grown in the to-be-reported quarter. The consensus mark for revenues from Annuities indicates an upside of 9.5% from the year-ago quarter’s reported figure.

The insurer’s Retirement business is also poised to benefit from the tailwinds of an improved economy, increased account values led by a robust equity market performance, strong returns from the alternative investment portfolio and a consistent expense efficiency.

The consensus mark for revenues from Retirement Plan Services and Group Protection businesses suggests an upside of 1.5% and 2.2% each from the respective year-ago quarter’s actuals.

LNC made consistent efforts to protect its investment returns in the face of a low interest rate environment. Its portfolio is performing quite well with high credit quality, which has been improving of late. Investment income has been rising from the past many years, a trend that most likely continued in the fourth quarter.

Moreover, its expenses are likely to have declined owing to lower costs related to benefits.

Lincoln National continues to report declining expense ratios in most of its businesses. Expense-saving measures will constantly aid earnings growth.

Earnings Surprise History

LNC has an impressive earnings surprise history. Its bottom line missed estimates in one of the trailing four quarters and beat the mark thrice, the average surprise being 2.11%. This is depicted in the chart below:

What Our Quantitative Model Predicts

The proven Zacks model does not conclusively predict 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. But that’s not the case here.

Earnings ESP: Lincoln National has an Earnings ESP of 0.00%. 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 #3, currently.

Stocks to Consider

Some stocks worth considering with the perfect mix of elements to surpass estimates in the upcoming releases are as follows:

American Equity Investment Life Holding (AEL - Free Report) currently has a Zacks Rank of 3 and an Earnings ESP of +2.86%.

The Allstate Corporation (ALL - Free Report) is currently Zacks #3 Ranked and has an Earnings ESP of +2.86%.

CNA Financial Corporation (CNA - Free Report) has an Earnings ESP of +2.65% and is presently a #3 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.