Yahoo Finance Lincoln National (LNC) Stock Gains 16.4% YTD: Here's Why
Lincoln National Corporation’s LNC shares have soared 16.4% in the year-to-date period. The stock has outperformed the industry’s 8.8% increase, 5.3% growth of the Finance sector and the 15.3% rise of the S&P 500 Index. Based in Radnor, PA, Lincoln National is a diversified life insurance and investment management company. With a market capitalization of $5.3 billion, the average volume of shares traded in the last three months was about 1.6 million.
A reviving Group Protection business, improving fixed annuity business, and positive flows in the Retirement Plan Services are aiding the company. Its focus on returning value to shareholders, pricing discipline, and new product introduction are supporting its performance. These factors are collectively contributing to the company's notable price appreciation.
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Key Drivers
Let’s delve deeper to discover the factors working in favor of this Zacks Rank #3 (Hold) stock.
The Zacks Consensus Estimate for Lincoln National’s 2024 full-year earnings is pegged at $5.98 per share, which indicates 14.6% year-over-year growth. The company beat earnings estimates thrice in the last four quarters and missed once.
The consensus mark for full-year 2024 revenues is pegged at nearly $18.7 billion, which suggests a 16.5% rise from the prior-year reported number. Improving annuities business and growth in the Group Protection business are expected to majorly contribute to the top-line growth in 2024.
The consensus estimate for Annuities and Group Protection’s 2024 total revenues indicates nearly 61.9% and 2.4% year-over-year growth, respectively. The consensus estimate for Retirement Plan Services total revenues suggests a 0.3% increase from the year-ago period. Rising premiums are expected to support growth in respective segments. The consensus mark for full-year 2024 insurance premiums suggests a 76.1% year-over-year improvement.
The company's Annuity segment is well-positioned for growth, buoyed by the expanding fixed annuities market and a focus on spread-based categories. The recent launch of a second-generation RILA product is expected to drive profitable growth further. Management expects Annuities’ operating income in the range of $1-$1.2 billion in 2024, the midpoint implying growth of 2.5% year over year.
In its Group Protection segment, LNC is implementing margin expansion strategies and investing in digital capabilities and relationship management. These efforts are aimed at strengthening operational efficiency and enhancing customer service, which should contribute to improved underwriting results and margin expansion. Group Protection’s operating income is expected to be in the range of $300-$350 million in 2024, the midpoint implying 8.7% growth from the year-ago figure.
Growing operating strength helps it return value to shareholders. In the first quarter, the company allocated $76 million toward dividend payout. Its dividend yield of 5.7% is higher than the industry average of 3.4%.
Lincoln National’s Retirement Plan Services witnessed nine consecutive years of positive net flows in 2023 with $132 million. The consensus estimate for the same for 2024 is pegged at $1.3 billion, indicating a massive year-over-year surge.
Risks
Despite the upside potential, there are a few factors that investors should keep an eye on. Its high debt burden is a concern. At the first-quarter end, LNC had a long-term debt of $5.7 billion and a long-term debt to capital of 45.2%, significantly higher than the industry average of 14.3%.
Also, its Life Insurance sales declined 30% year over year in the first quarter of 2024. The segment was impacted by the company’s shift to high-margin businesses with more stable cash flows. The consensus estimate for Life Insurance 2024 total revenues implies a nearly 8.8% year-over-year decline. Nevertheless, we believe that a systematic and strategic plan of action will drive its long-term growth.
Stocks to Consider
Some better-ranked stocks from the insurance space are Reinsurance Group of America, Inc. RGA, Skyward Specialty Insurance Group, Inc. SKWD, and RLI Corp. RLI. Each of these companies presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The bottom line of Reinsurance Group of America outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 19.5%. The Zacks Consensus Estimate for RGA’s 2024 earnings suggests a 5.3% improvement, while the consensus mark for revenues indicates 12.9% growth from the respective prior-year reported figures.
The bottom line of Skyward Specialty outpaced estimates in each of the last four quarters, the average surprise being 30.5%. The Zacks Consensus Estimate for SKWD’s 2024 earnings suggests an improvement of 31.8%, while the consensus mark for revenues indicates growth of 25.8% from the corresponding year-ago reported figures.
RLI’s bottom line outpaced estimates in three of the trailing four quarters and missed the mark once, the average surprise being 132.4%. The Zacks Consensus Estimate for RLI’s 2024 earnings indicates an 18.4% rise, while the consensus mark for revenues suggests 15.6% growth from the respective prior-year reported figures.
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Lincoln National Corporation (LNC) : Free Stock Analysis Report
RLI Corp. (RLI) : Free Stock Analysis Report
Reinsurance Group of America, Incorporated (RGA) : Free Stock Analysis Report
Skyward Specialty Insurance Group, Inc. (SKWD) : Free Stock Analysis Report
