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Is Lincoln National (LNC) Poised to Beat on Earnings in Q3?

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Lincoln National Corporation (LNC - Free Report) is scheduled to report third-quarter earnings results after market close on Nov 2.

Last quarter, this insurer reported results in line with the estimates. Lincoln National missed the consensus estimate in three out of the past four reported quarters, with the average miss being 10.8%. Will Lincoln National manage to beat estimates this quarter?

Earnings Whispers

Our proven model shows that Lincoln National is likely to beat on earnings as it has the right combination of the two key components. Note that a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or #2 (Buy) or at least #3 (Hold) to have a significantly higher chance of beating estimates.

Zacks ESP: Lincoln National’s Most Accurate estimate is pegged at $1.63 per share, which is a penny above the Zacks Consensus Estimate of $1.62. The Earnings ESP is thus +0.62%. Please check our Earnings ESP Filter that enables you find stocks that are expected to come out with earnings surprises.

Zacks Rank:  Lincoln National has a Zacks Rank #2, which increases the predictive power of ESP.

Why a Likely Positive Surprise?

We expect to see an increase in Group Protection sales, as the company took repricing efforts and enhanced claims management functions to restore profitability in the segment. These efforts had resulted in sales growth of 15% in the previous quarter.

In Retirement Plan Services, small market sales are expected to increase as a result of distribution expansion and increased wholesaler productivity. This momentum is expected to continue, aided by the recent launch of enhanced small-market Director product.

The life insurance segment results are expected to show top-line growth from an increase in sales of products without long-term guarantees, which will be partly offset by the scale back of the sale of products with long-term guarantees.

The bottom line will benefit from the company’s expense management efforts. The company is successfully managing general and administrative expenses in a period of slower revenue growth as witnessed by a decline in expense ratio by 50 basis points in the previous quarter. We expect to see a reduction in expenses in the third quarter as well.

Finally, Lincoln National’s share repurchase driven by its balance sheet strength and capital generation will further lift its bottom line.

Nevertheless, earnings will likely suffer from low investment income and a decline in income from alternative investments.

LINCOLN NATL-IN Price and EPS Surprise

LINCOLN NATL-IN Price and EPS Surprise | LINCOLN NATL-IN Quote

Other Stocks to Consider

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

Hercules Capital, Inc. (HTGC - Free Report) is scheduled to release third-quarter earnings results on Nov 3. The company has an Earnings ESP of +3.13% and a Zacks Rank #2.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Allstate Corp. (ALL - Free Report) has an Earnings ESP of +1.61% and carries a Zacks Rank #3. The company is slated to report third-quarter earnings results on Nov 2.

Cigna Corp. (CI - Free Report) has an Earnings ESP of +2.62% and carries a Zacks Rank #3. The company is slated to report third-quarter earnings results on Nov 3.

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