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What's in Store for Lincoln National (LNC) in Q1 Earnings?

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 Lincoln National Corp. (LNC - Free Report) is scheduled to report first-quarter 2019 results on May 1. Per the Zacks Consensus Estimate, the company is expected to earn $2.08 on a per share basis on revenues of $4.33 billion, which translates into year-over-year growth of 5.6% and 20%, respectively.

Q1 Earnings Catalysts

Management actions targeted towards expanding the product portfolio in fast growing segments of the market and increasing the breadth and effectiveness of the company’s distribution force will drive broad based earnings growth across all its segments – Annuities, Life Insurance, Retirement Plan Services and Group Protection.

The company’s Annuities segment should gain from its high quality and growing book of business, which features new products and expanded distribution. Its decision to participate in more segments of the marketplace is enabling the company to reach more customers and advisors, which is likely to aid sales growth.

In the company’s Life Insurance segment, sales will likely increase from gains across most of its individual life insurance products including Variable Universal Life, Individual Universal Life, Universal Life and term, partly offset by a likely decline in executive benefit sales. Per the Zacks Consensus Estimate, revenues from this segment are expected at $1.7 billion, up 2.4% year over year.

In Retirement Plan Services segment, total deposits should increase from growth in both first-year sales and recurring deposits. Investments in high-touch and high-tech digitally-focused business model are leading to better outcomes for both plan sponsors and plan participants. This is resulting in sales growth, increase in employee contributions and excellent retention in both the small, mid and large markets, and the same will be seen in the first quarter. Per the Zacks Consensus Estimate, revenues from this segment are expected at $297 million up 1.7% year over year.

The Group Protection business should see an increase in earnings from the acquisition of the Liberty Mutual group benefits business. The Liberty acquisition has broadened the company’s customer base and distribution access, and increased the percentage of earnings from traditional insurance risks.

A few years ago, the company made a strategic decision to accelerate its investments in digital technology, with a focus on enhancing the customer experience while also realizing expense savings. This initiative is progressing well and it expects savings to largely offset expenses in 2019, consistent with its prior target. Though material savings to the bottom-line will be seen in 2020, for the to-be-reported quarter, we expect expenses to be on a higher side due to these initiatives and expenses related to Liberty acquisition.

Lincoln National boasts a disciplined capital management strategy, which includes share buyback, dividend payouts, and selective acquisitions.
Therefore, the bottom line should gain from share repurchases made by the company in the first quarter.

Earnings Surprise

The company boasts an attractive earnings surprise history. It beat estimates in three out of the trailing four quarters, delivering an average positive surprise of 1.63%.

Lincoln National Corporation Price and EPS Surprise

What Our Model Says    
 
Our proven model does not conclusively show that Lincoln National is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

 

Earnings ESP: The Earnings ESP for Lincoln National is 0.00%.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Though the company currently has a Zacks Rank #3, its Earnings ESP leaves our surprise prediction inconclusive.

Stocks Worth Considering

Some stocks from the property and casualty industry with the perfect mix of elements to outshine estimates this time around are as follows:

The Allstate Corporation (ALL - Free Report) is set to report first-quarter earnings on May 1. The company has an Earnings ESP of +0.70% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Everest Re Group, Ltd. (RE - Free Report) has an Earnings ESP of +3.27% and a Zacks Rank of 3. The company is scheduled to release first-quarter earnings on May 6.

RenaissanceRe Holdings Ltd. (RNR - Free Report) has an Earnings ESP of +3.29% and a Zacks Rank of 2. The company is slated to announce first-quarter earnings on May 7.
 

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