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Here's Why You Should Retain Lincoln National (LNC) Stock
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Lincoln National Corporation (LNC - Free Report) is well poised to grow on the back of strong life business, resurging Group Protection unit and accretive acquisitions. A lower unemployment rate is likely to drive the company’s group insurance product sales and premiums.
Lincoln National — with a market cap of $10.7 billion — is a diversified life insurance and investment management company. One of the key differentiators at LincolnNational is its strong distribution franchise. Demand for LNC’s life insurance products continues to increase.
Courtesy of solid prospects, this Zacks Rank #3 (Hold) stock is worth holding on to at the moment.
2022 Estimates
The Zacks Consensus Estimate for Lincoln National’s 2022 earnings is pegged at $10.59 per share, indicating a 29.2% year-over-year rise. In the last four quarters, the company beat earnings estimates twice and missed the same on the other two occasions. The consensus estimate for 2022 revenues stands at $19.1 billion.
Lincoln National Corporation Price and EPS Surprise
A consistent low-interest-rate environment made life insurers prone to interest rate risks, given its rate-sensitive investments and products. With the Fed indicating multiple rate hikes this year, life insurers like Lincoln National are poised to benefit. Expanded investment options and index strategies position the company well to witness sales growth this year.
LNC’s Group Protection business, which was facing challenges earlier, has been rapidly recovering. The company continues to see improved growth and profitability trends in the unit on the back of the acquired Liberty Mutual's group benefits business, increased scale, broader distribution access and expanded capabilities. The acquisition positioned the company as a Group Benefits market leader. With the effects of the pandemic fast diminishing, the acquisition is proving to be fruitful.
A well-diversified and low-risk product profile offers it diversification benefits and fetches lucrative business returns. The introduction of new products and solutions will likely further boost LNC’s customer base and expand distribution capabilities. We expect multiple product introductions from Lincoln National in the first half of 2022. Increased awareness following the pandemic will continue to benefit its life insurance business. Even though the effects of the pandemic are likely to persist in the coming days, the company is expected to witness increased profits on the back of the Spark Initiative.
LNC’s shareholder-friendly moves are praiseworthy. It has plans to utilize $900 million for share buybacks from $1.2 billion generated from its block sale with Resolution Life and expects to complete the same by the end of first-quarter 2022. This is in addition to its regular share repurchase. Last November, the company’s board of directors approved a 7% hike in the quarterly dividend.
Key Concerns
There are a few factors that are impeding the growth of Lincoln National. Its high debt burden is concerning. LNC exited the fourth quarter with cash and invested cash of only $2,612 million, which was much lower than the long-term debt of $6,325 million. This can restrict its financial flexibility. Also, free cash flow in the trailing 12-month period declined 71.7% year over year to $151 million. Nevertheless, we believe that a systematic and strategic plan of action will drive AIG’s long-term growth.
Cincinnati Financial’s consistent cash flow and sufficient cash balance continue to boost liquidity. Based in Fairfield, OH, Cincinnati Financial’s bottom-line estimates for first-quarter 2022 indicate an 8% year-over-year rise. CINF beat earnings estimates in each of the last four quarters, with an average of 38.5%.
First American Financial has been generating improving revenues over the years on the back of growing direct premiums and escrow fees, and title agent premiums. The Zacks Consensus Estimate for FAF’s 2022 bottom line has improved 2.2% in the past 30 days. First American Financial beat earnings estimates in each of the last four quarters, with an average of 29.4%.
Berkshire Hathaway is expected to benefit from disciplined capital management and acquisitions. The Zacks Consensus Estimate for BRK.B’s bottom-line for 2022 indicates a 6.1% year-over-year rise. Headquartered in Omaha, NE, Berkshire Hathaway beat earnings estimates thrice in the last four quarters and missed once, with an average surprise of 11.9%.
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Here's Why You Should Retain Lincoln National (LNC) Stock
Lincoln National Corporation (LNC - Free Report) is well poised to grow on the back of strong life business, resurging Group Protection unit and accretive acquisitions. A lower unemployment rate is likely to drive the company’s group insurance product sales and premiums.
Lincoln National — with a market cap of $10.7 billion — is a diversified life insurance and investment management company. One of the key differentiators at LincolnNational is its strong distribution franchise. Demand for LNC’s life insurance products continues to increase.
Courtesy of solid prospects, this Zacks Rank #3 (Hold) stock is worth holding on to at the moment.
2022 Estimates
The Zacks Consensus Estimate for Lincoln National’s 2022 earnings is pegged at $10.59 per share, indicating a 29.2% year-over-year rise. In the last four quarters, the company beat earnings estimates twice and missed the same on the other two occasions. The consensus estimate for 2022 revenues stands at $19.1 billion.
Lincoln National Corporation Price and EPS Surprise
Lincoln National Corporation price-eps-surprise | Lincoln National Corporation Quote
Growth Drivers
A consistent low-interest-rate environment made life insurers prone to interest rate risks, given its rate-sensitive investments and products. With the Fed indicating multiple rate hikes this year, life insurers like Lincoln National are poised to benefit. Expanded investment options and index strategies position the company well to witness sales growth this year.
LNC’s Group Protection business, which was facing challenges earlier, has been rapidly recovering. The company continues to see improved growth and profitability trends in the unit on the back of the acquired Liberty Mutual's group benefits business, increased scale, broader distribution access and expanded capabilities. The acquisition positioned the company as a Group Benefits market leader. With the effects of the pandemic fast diminishing, the acquisition is proving to be fruitful.
A well-diversified and low-risk product profile offers it diversification benefits and fetches lucrative business returns. The introduction of new products and solutions will likely further boost LNC’s customer base and expand distribution capabilities. We expect multiple product introductions from Lincoln National in the first half of 2022. Increased awareness following the pandemic will continue to benefit its life insurance business. Even though the effects of the pandemic are likely to persist in the coming days, the company is expected to witness increased profits on the back of the Spark Initiative.
LNC’s shareholder-friendly moves are praiseworthy. It has plans to utilize $900 million for share buybacks from $1.2 billion generated from its block sale with Resolution Life and expects to complete the same by the end of first-quarter 2022. This is in addition to its regular share repurchase. Last November, the company’s board of directors approved a 7% hike in the quarterly dividend.
Key Concerns
There are a few factors that are impeding the growth of Lincoln National. Its high debt burden is concerning. LNC exited the fourth quarter with cash and invested cash of only $2,612 million, which was much lower than the long-term debt of $6,325 million. This can restrict its financial flexibility. Also, free cash flow in the trailing 12-month period declined 71.7% year over year to $151 million. Nevertheless, we believe that a systematic and strategic plan of action will drive AIG’s long-term growth.
Key Picks
Some better-ranked stocks in the insurance space include Cincinnati Financial Corporation (CINF - Free Report) , First American Financial Corporation (FAF - Free Report) and Berkshire Hathaway Inc. (BRK.B - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cincinnati Financial’s consistent cash flow and sufficient cash balance continue to boost liquidity. Based in Fairfield, OH, Cincinnati Financial’s bottom-line estimates for first-quarter 2022 indicate an 8% year-over-year rise. CINF beat earnings estimates in each of the last four quarters, with an average of 38.5%.
First American Financial has been generating improving revenues over the years on the back of growing direct premiums and escrow fees, and title agent premiums. The Zacks Consensus Estimate for FAF’s 2022 bottom line has improved 2.2% in the past 30 days. First American Financial beat earnings estimates in each of the last four quarters, with an average of 29.4%.
Berkshire Hathaway is expected to benefit from disciplined capital management and acquisitions. The Zacks Consensus Estimate for BRK.B’s bottom-line for 2022 indicates a 6.1% year-over-year rise. Headquartered in Omaha, NE, Berkshire Hathaway beat earnings estimates thrice in the last four quarters and missed once, with an average surprise of 11.9%.