Back to top

Image: Bigstock

Are Investors Undervaluing Lincoln National (LNC) Right Now?

Read MoreHide Full Article

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One stock to keep an eye on is Lincoln National (LNC - Free Report) . LNC is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 4.55, which compares to its industry's average of 8.41. Over the last 12 months, LNC's Forward P/E has been as high as 5.23 and as low as 2.99, with a median of 4.35.

LNC is also sporting a PEG ratio of 0.25. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. LNC's PEG compares to its industry's average PEG of 0.74. LNC's PEG has been as high as 0.27 and as low as 0.15, with a median of 0.22, all within the past year.

Another notable valuation metric for LNC is its P/B ratio of 0.70. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 1.97. Over the past year, LNC's P/B has been as high as 2.13 and as low as 0.65, with a median of 0.78.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. LNC has a P/S ratio of 0.45. This compares to its industry's average P/S of 1.03.

Finally, our model also underscores that LNC has a P/CF ratio of 16.19. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. LNC's P/CF compares to its industry's average P/CF of 17.56. Over the past year, LNC's P/CF has been as high as 17.16 and as low as -24.14, with a median of 3.08.

These are just a handful of the figures considered in Lincoln National's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that LNC is an impressive value stock right now.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Lincoln National Corporation (LNC) - free report >>

Published in