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Is Lincoln National (LNC) a Suitable Choice for Value Investors?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Lincoln National Corporation (LNC - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Lincoln National has a trailing twelve months PE ratio of 9.93. This level compares pretty favorably with the market at large, as the PE ratio for the S&P 500 comes in at about 20.50.
If we focus on the long-term trend of the stock, the current level puts Lincoln National’s current PE among its highs over the past five years. This suggests that the stock is overvalued compared to its own historical levels.
Further, the stock’s PE compares vastly favorably with the Zacks classified Insurance – Life Insurance industry’s trailing twelve months PE ratio, which stands at 17.65. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Lincoln National has a forward PE ratio (price relative to this year’s earnings) of 9.72 – which is faintly lower than the current level. So it is fair to say that a slightly more value-oriented path may be ahead for Lincoln National stock in the near term too.
PS Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Lincoln National has a P/S ratio of about 1.19. This is lower than the Zacks categorized Insurance – Life Insurance industry average, which comes in at 1.42 right now.
LNC is actually in the higher zone of its trading range in the time period per the P/S metric, which suggests that the company’s stock price has already appreciated to some degree, relative to its sales.
PEG Ratio
While earnings are certainly important, it is essential to know how much you are paying for the growth of earnings as well. One can easily do that with the PEG ratio (ratio of the P/E to the expected future earnings growth rate).The PEG ratio gives a more complete picture of the valuation of a stock than the P/E ratio.
Lincoln National’s PEG ratio stands at 1.00, compared with the Zacks Insurance – Life Insurance industry average of 1.59. This suggests a decent undervalued trading relative to its earnings growth potential right now.
Broad Value Outlook
In aggregate, Lincoln National currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Lincoln National a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, its P/B ratio (used to compare a stock's market value to its book value) stands at 1.07, lower than the industry average of 1.13. Clearly, LNC is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Lincoln National might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘F’ and a Momentum score of ‘A’. This gives LNC a Zacks VGM score—or its overarching fundamental grade—of ‘C’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been trending upwards lately. The current quarter has seen three estimates go higher in the past thirty days compared to one lower, while the full year estimate has seen three upward revisions and one downward revision in the same time period.
This has had just a small impact on the consensus estimate though as the current quarter consensus estimate has inched up 0.6% in the past month, while the full year estimate has increased 0.4%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This positive trend signifies bullish analyst sentiment, and its Zacks Rank #2 (Buy) indicates robust fundamentals and expectations of outperformance in the near term.
Bottom Line
Lincoln National is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. With a formidable industry rank (among the Top 18% out of more than 250 industries) and strong Zacks Rank, Lincoln National looks like a strong value contender. In fact, over the past one year, the Zacks Insurance – Life Insurance industry has clearly outperformed the broader market, as you can see below:
Meanwhile, Lincoln National is well positioned for long-term growth, given its focus on reducing exposure to businesses with long-term guarantee. Its strong capital position is another positive. The company is prudent in managing its capital which has led to an improvement in book value.
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
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Is Lincoln National (LNC) a Suitable Choice for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Lincoln National Corporation (LNC - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Lincoln National has a trailing twelve months PE ratio of 9.93. This level compares pretty favorably with the market at large, as the PE ratio for the S&P 500 comes in at about 20.50.
If we focus on the long-term trend of the stock, the current level puts Lincoln National’s current PE among its highs over the past five years. This suggests that the stock is overvalued compared to its own historical levels.
Further, the stock’s PE compares vastly favorably with the Zacks classified Insurance – Life Insurance industry’s trailing twelve months PE ratio, which stands at 17.65. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Lincoln National has a forward PE ratio (price relative to this year’s earnings) of 9.72 – which is faintly lower than the current level. So it is fair to say that a slightly more value-oriented path may be ahead for Lincoln National stock in the near term too.
PS Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Lincoln National has a P/S ratio of about 1.19. This is lower than the Zacks categorized Insurance – Life Insurance industry average, which comes in at 1.42 right now.
LNC is actually in the higher zone of its trading range in the time period per the P/S metric, which suggests that the company’s stock price has already appreciated to some degree, relative to its sales.
PEG Ratio
While earnings are certainly important, it is essential to know how much you are paying for the growth of earnings as well. One can easily do that with the PEG ratio (ratio of the P/E to the expected future earnings growth rate).The PEG ratio gives a more complete picture of the valuation of a stock than the P/E ratio.
Lincoln National’s PEG ratio stands at 1.00, compared with the Zacks Insurance – Life Insurance industry average of 1.59. This suggests a decent undervalued trading relative to its earnings growth potential right now.
Broad Value Outlook
In aggregate, Lincoln National currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Lincoln National a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, its P/B ratio (used to compare a stock's market value to its book value) stands at 1.07, lower than the industry average of 1.13. Clearly, LNC is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Lincoln National might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘F’ and a Momentum score of ‘A’. This gives LNC a Zacks VGM score—or its overarching fundamental grade—of ‘C’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been trending upwards lately. The current quarter has seen three estimates go higher in the past thirty days compared to one lower, while the full year estimate has seen three upward revisions and one downward revision in the same time period.
This has had just a small impact on the consensus estimate though as the current quarter consensus estimate has inched up 0.6% in the past month, while the full year estimate has increased 0.4%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Lincoln National Corporation Price and Consensus
Lincoln National Corporation Price and Consensus | Lincoln National Corporation Quote
This positive trend signifies bullish analyst sentiment, and its Zacks Rank #2 (Buy) indicates robust fundamentals and expectations of outperformance in the near term.
Bottom Line
Lincoln National is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. With a formidable industry rank (among the Top 18% out of more than 250 industries) and strong Zacks Rank, Lincoln National looks like a strong value contender. In fact, over the past one year, the Zacks Insurance – Life Insurance industry has clearly outperformed the broader market, as you can see below:
Meanwhile, Lincoln National is well positioned for long-term growth, given its focus on reducing exposure to businesses with long-term guarantee. Its strong capital position is another positive. The company is prudent in managing its capital which has led to an improvement in book value.
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>