Lincoln National (NYSE:LNC) Announces Quarterly Earnings Results, Misses Estimates By $0.24 EPS

Lincoln National (NYSE:LNC) posted its quarterly earnings results on Thursday. The financial services provider reported $1.72 EPS for the quarter, missing the consensus estimate of $1.96 by ($0.24), FiscalAI reports. The business had revenue of $5.06 billion during the quarter, compared to analysts’ expectations of $4.97 billion. Lincoln National had a net margin of 12.21% and a return on equity of 17.35%. During the same quarter in the previous year, the business posted $2.04 EPS.

Here are the key takeaways from Lincoln National’s conference call:

• Lincoln said it largely completed its three-year transformation goals, including transferring about 60% of guaranteed universal life reserves to reinsurance partners and addressing its preferred stock. With its Holdco cash build for the remaining preferred redemption complete, the company resumed share repurchases and expects to increase them, while continuing to invest in its businesses.
• Adjusted operating income available to common stockholders was $339 million, or $1.72 per share, including a $95 million after-tax reduction from the annual assumption review. Alternative investments returned 16.5% annualized, above the 10% target, contributing $55 million of after-tax above-target income.
• Annuity sales rose 21% sequentially to $4.3 billion, led by fixed annuity sales that more than doubled to $1.4 billion; spread-based products made up 67% of sales. Management expects fixed annuity momentum to continue, though it forecast fourth-quarter earnings roughly flat with the third quarter, excluding the review impact.
• Group Protection earnings fell to $77 million from $110 million a year earlier, as disability severity and the normalization of previously favorable incidence pressured results. Lincoln expects the full-year margin to finish at or modestly below the low end of its 8%–9% range, with incidence pressure expected to persist.
• Life earnings improved to $130 million from $54 million a year earlier, but results benefited from favorable mortality and above-target alternative returns; management said the business generated about $158 million over the past year excluding those factors. Retirement Plan Services earnings also increased, but first-year sales were down and management expects uneven flows as its strategic realignment proceeds.

Lincoln National Stock Down 5.8%

LNC traded down $2.40 during trading hours on Thursday, reaching $39.20. 3,672,346 shares of the stock traded hands, compared to its average volume of 1,874,914. The firm’s fifty day simple moving average is $41.59 and its two-hundred day simple moving average is $39.02. The company has a market cap of $7.51 billion, a price-to-earnings ratio of 3.40, a PEG ratio of 1.40 and a beta of 1.16. Lincoln National has a fifty-two week low of $32.18 and a fifty-two week high of $47.67. The company has a debt-to-equity ratio of 0.62, a current ratio of 0.27 and a quick ratio of 0.27.

Lincoln National Dividend Announcement

The company also recently announced a quarterly dividend, which was paid on Monday, November 2nd. Stockholders of record on Monday, October 12th were paid a $0.45 dividend. The ex-dividend date was Friday, October 9th. This represents a $1.80 annualized dividend and a dividend yield of 4.6%. Lincoln National’s dividend payout ratio is 15.60%.

Analysts Set New Price Targets

Several equities research analysts have recently issued reports on LNC shares. Barclays increased their price objective on shares of Lincoln National from $45.00 to $48.00 and gave the stock an “overweight” rating in a research report on Wednesday, October 7th. TD Cowen lifted their target price on shares of Lincoln National from $37.00 to $42.00 and gave the company a “hold” rating in a report on Wednesday, July 22nd. Weiss Ratings reaffirmed a “buy (b)” rating on shares of Lincoln National in a research report on Friday, October 30th. National Bank Financial set a $49.00 price target on Lincoln National in a report on Wednesday, October 7th. Finally, JPMorgan Chase & Co. cut their price objective on Lincoln National from $49.00 to $47.00 and set an “underweight” rating on the stock in a research report on Thursday, October 15th. Seven analysts have rated the stock with a Buy rating, five have given a Hold rating and one has given a Sell rating to the company. Based on data from MarketBeat, Lincoln National has a consensus rating of “Hold” and a consensus target price of $48.67.

Lincoln National News Summary

Here are the key news stories impacting Lincoln National this week:

• Positive Sentiment: Lincoln reported Q3 revenue of $5.06 billion, topping analysts’ $4.97 billion estimate. The company also reported higher net income year over year. Lincoln National Corp. Profit Rises In Q3
• Positive Sentiment: Lincoln said it expects share repurchases to ramp up from an initial $50 million, offering a potential source of support for shareholder returns. Lincoln Financial anticipates RPS outflows as buybacks ramp
• Negative Sentiment: Adjusted earnings were $1.72 per share, below the $1.96 consensus estimate and down from $2.04 a year earlier. The earnings shortfall and year-over-year decline likely weighed on sentiment despite the revenue beat. Lincoln National Q3 Earnings Lag Estimates
• Negative Sentiment: Lincoln anticipates about $3 billion in net outflows from Retirement Plan Services (RPS) during Q4, a potential headwind to flows in the coming quarter. Lincoln Financial anticipates RPS outflows as buybacks ramp

Insiders Place Their Bets

In other Lincoln National news, Director Gary Kelly sold 15,007 shares of the business’s stock in a transaction on Wednesday, August 12th. The shares were sold at an average price of $26.50, for a total value of $397,685.50. The sale was disclosed in a document filed with the SEC, which is available at this link. Also, EVP Sean Woodroffe sold 11,000 shares of the company’s stock in a transaction dated Monday, August 17th. The shares were sold at an average price of $45.28, for a total transaction of $498,080.00. Following the completion of the transaction, the executive vice president directly owned 119,947 shares of the company’s stock, valued at approximately $5,431,200.16. The trade was a 8.40% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. Insiders own 1.03% of the company’s stock.

Lincoln National Company Profile

Lincoln National Corporation, operating under the Lincoln Financial Group brand, is a financial services company that provides insurance and retirement products primarily in the United States. Its businesses are designed to help individuals, employers and institutions manage financial protection, income and long-term savings needs.

The company offers life insurance and annuities, including products intended to provide death-benefit protection, retirement income and asset accumulation. Through its group protection business, Lincoln also provides employer-sponsored disability, dental, vision and leave-management solutions, as well as related workplace benefits and services.

Lincoln traces its history to the founding of The Lincoln National Life Insurance Company in Fort Wayne, Indiana, in 1905.