Lincoln National (LNC) Rises 47.2% in a Year: Growth Ahead?
Lincoln National Corporation LNC shares have jumped 47.2% in the past year. The stock has outperformed the industry’s 35% increase, the 30.8% growth of the Finance sector and the 32.4% rise of the S&P 500 Index. Based in Radnor, PA, Lincoln National is a diversified life insurance and investment management company. Ithas a market cap of $4.8 billion.
A fast-recovering Group Protection business, strong 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 this Zacks Rank #3 (Hold) company's notable price appreciation.
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Can LNC Retain Momentum?
The ingredients are there, and now let’s get into the details and show you how its estimates for the coming days stand.
The Zacks Consensus Estimate for Lincoln National’s 2024 full-year earnings is pegged at $6.62 per share, which indicates 26.8% year-over-year growth. The estimate increased by 5 cents over the past month. The company beat earnings estimates thrice in the last four quarters and missed once.
The consensus mark for full-year 2024 revenues stands at nearly $18.8 billion, which suggests a 17.2% rise from the prior-year reported number. Improvement in revenues from the Annuities business and growth in Group Protection are expected to majorly contribute to the top line’s jump.
The consensus estimates for Annuities and Group Protection’s 2024 total revenues indicate nearly 57% and more than 5% year-over-year growth, respectively. The same for Retirement Plan Services total revenues suggests a 2.8% 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 79% year-over-year improvement.
Increasing scale, broader distribution access and expanded capabilities are expected to provide its Group Protection segment's sales figures an impetus. Improving underwriting results are expected to bolster its margins. Growing operating strength helps it returnvalue to shareholders. Last year, the company allocated $305 million toward dividend payout. Its dividend yield of 6% is higher than the industry average of 3.3%.
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 $980.7 million, 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 fourth quarter-end, LNC had a long-term debt of $5.7 billion and a long-term debt to capital of 45.3%, significantly higher than the industry average of 14.7%.
Also, its Life Insurance sales declined 23.1% year over year in 2023. The segment is affected by high reinsurance costs and spread pressure. The consensus estimate for Life Insurance 2024 total revenues implies a nearly 7% year-over-year fall. Nevertheless, we believe that a systematic and strategic plan of action will drive its long-term growth.
Key Picks
Some better-ranked stocks in the broader Finance space are Ryan Specialty Holdings, Inc. RYAN, Root, Inc. ROOT and Brown & Brown, Inc. BRO, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Ryan Specialty’s 2024 full-year earnings indicates a 28.3% year-over-year increase. It beat earnings estimates in two of the past four quarters and met twice, with an average surprise of 5.1%. Also, the consensus mark for RYAN’s 2024 full-year revenues suggests 19.5% year-over-year growth.
The consensus mark for Root’s 2024 full-year earnings indicates a 23.1% year-over-year improvement. The earnings estimate has witnessed three upward estimate revisions in the past month against no movement in the opposite direction. Furthermore, the consensus estimate for ROOT’s 2024 full-year revenues suggests 101.8% year-over-year growth.
The Zacks Consensus Estimate for Brown & Brown’s 2024 full-year earnings is pegged at $3.29 per share, which indicates 17.1% year-over-year growth. The estimate jumped by 9 cents over the past month. BRO beat earnings estimates in each of the past four quarters, with an average surprise of 11.2%.
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