Can Lower Costs Aid Lincoln National (LNC) in Q2 Earnings?
Lincoln National Corporation LNC is scheduled to report second-quarter 2023 results on Aug 2, after market close.
Q2 Estimates
The Zacks Consensus Estimate for LNC’s second-quarter earnings per share is pegged at $1.92, which implies a 13.9% fall from the prior-year quarter’s reported figure.
The consensus mark for revenues stands at $4,602 million, suggesting a 0.8% dip from the year-ago quarter’s tally.
Earnings Surprise History
Lincoln National’s earnings beat estimates in one of the trailing four quarters and missed the mark thrice, the average negative surprise being 170.46%. This is depicted in the chart below:
Lincoln National Corporation Price and EPS Surprise
Lincoln National Corporation price-eps-surprise | Lincoln National Corporation Quote
What Our Quantitative Model Unveils
Our proven model predicts an earnings beat for Lincoln National this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here.
Earnings ESP: Lincoln National has an Earnings ESP of +0.76% because the Most Accurate Estimate of $1.93 is pegged higher than the Zacks Consensus Estimate of $1.92. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: LNC carries a Zacks Rank of 3.
Factors to Note
Revenues of Lincoln National are likely to have benefited on the back of strong contribution by the Group Protection segment in the second quarter. The unit is expected to have been aided by expanding premiums resulting from increased sales, prudent price increases and solid persistency rates. Reduced disability claims and an improved loss ratio in the Group Life business are also likely to have contributed to the segment’s quarterly performance.
We expect net income of the Group Protection business to be $80 million, which indicates a surge of 63.3% year over year.
The Annuities segment of LNC is likely to have received an impetus from improved net inflows as well as higher fixed annuity and index variable annuity sales. However, the upside is expected to have been partly offset by reduced account values and decline in prepayment income in the to-be-reported quarter.
Our estimate for insurance premiums of the Annuities unit stands at $37.4 million in the second quarter, suggesting 49.4% growth from the year-ago quarter’s reported figure. We expect net income of the segment to dip 1.6% year over year to $289.2 million.
The quarterly results of Lincoln National are likely to have been driven by feeble contributions from the Retirement Plan Services segment. A fall in prepayment income and the adverse impact of weaker equity markets on fee income are expected to have exerted strain on the unit’s performance in the to-be-reported quarter. We estimate net income of the Retirement Plan Services segment to be $54.1 million, down 1.6% year over year.
The Life Insurance segment is likely to have suffered a blow due to the decline in term product sales and continued mortality claims in the to-be-reported quarter. Our estimate for the unit’s insurance premiums stands at $264.8 million, which implies a 6.4% fall from the prior-year quarter’s reported number.
A decline in fee income and net investment income are likely to have weighed on the overall revenues of Lincoln National in the second quarter. We expect both the metrics to witness year-over-year declines of 9.2% and 8.8%, respectively.
Numerous cost-cutting initiatives are likely to have provided some respite to the margins of Lincoln National in the to-be-reported quarter. Our estimate for total expenses stands at $3,103.4 million in the second quarter, which hints toward a 31.7% drop year over year.
Other Stocks to Consider
Here are some other companies from the insurance space, which according to our model, also have the right combination of elements to beat on earnings this time around:
American Equity Investment Life Holding Company AEL currently has an Earnings ESP of +1.12% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for AEL’s second-quarter 2023 earnings is pegged at $1.65 per share, indicating a surge of 68.4% from the prior-year quarter’s reported number.
American Equity’s earnings beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 13.01%.
Lemonade, Inc. LMND has an Earnings ESP of +3.10% and a Zacks Rank of 3 at present. The Zacks Consensus Estimate for LMND’s second-quarter 2023 earnings stands at a loss of $1.02 per share, narrower than the prior-year quarter’s figure of $1.10 per share.
Lemonade’s earnings beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 13.89%.
Brighthouse Financial, Inc. BHF has an Earnings ESP of +0.42% and a Zacks Rank of 3 at present. The Zacks Consensus Estimate for BHF’s second-quarter 2023 earnings is pegged at $3.55 per share, which indicates an improvement of 7.9% from the prior-year quarter’s reported figure.
Brighthouse Financial has witnessed three upward estimate revisions for second-quarter earnings compared to two downward estimate revisions in the past 30 days.
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Lincoln National Corporation (LNC) : Free Stock Analysis Report
American Equity Investment Life Holding Company (AEL) : Free Stock Analysis Report
Brighthouse Financial, Inc. (BHF) : Free Stock Analysis Report
Lemonade, Inc. (LMND) : Free Stock Analysis Report
