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

Key Points

• Lincoln National earned $1.72 per share, missing the $1.96 consensus and declining from $2.04 a year earlier; revenue beat estimates, reaching $5.06 billion versus $4.97 billion expected.
• The company said it largely completed its three-year transformation goals and has resumed share repurchases, with plans to increase buybacks.
• Annuity sales rose 21% sequentially, but management expects roughly flat fourth-quarter earnings and flagged ongoing pressure in Group Protection and about $3 billion in anticipated Retirement Plan Services outflows.

Lincoln National (NYSE:LNC - Get Free Report) released its quarterly earnings results on Thursday. The financial services provider reported $1.72 earnings per share for the quarter, missing analysts' consensus estimates of $1.96 by ($0.24), FiscalAI reports. Lincoln National had a return on equity of 17.35% and a net margin of 12.21%. The company had revenue of $5.06 billion during the quarter, compared to analyst estimates of $4.97 billion. During the same period last year, the firm earned $2.04 earnings per share.

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 Trading Down 5.8%

LNC stock traded down $2.40 on Thursday, hitting $39.20. 3,672,346 shares of the company were exchanged, compared to its average volume of 1,874,914. Lincoln National has a twelve month low of $32.18 and a twelve month 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. The business's fifty day moving average is $41.59 and its two-hundred day moving average is $39.02. The stock has a market capitalization of $7.51 billion, a price-to-earnings ratio of 3.40, a price-to-earnings-growth ratio of 1.40 and a beta of 1.16.

Lincoln National Announces Dividend

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

More Lincoln National News

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 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 transaction of $397,685.50. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which can be accessed through this link. Also, EVP Sean Woodroffe sold 11,000 shares of the business's stock in a transaction on Monday, August 17th. The shares were sold at an average price of $45.28, for a total transaction of $498,080.00. Following the sale, the executive vice president directly owned 119,947 shares of the company's stock, valued at $5,431,200.16. This represents a 8.40% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. 1.03% of the stock is owned by company insiders.

Wall Street Analysts Forecast Growth

LNC has been the topic of a number of analyst reports. Mizuho decreased their target price on shares of Lincoln National from $53.00 to $49.00 and set an "outperform" rating on the stock in a research report on Wednesday, October 7th. UBS Group boosted their price target on Lincoln National from $44.00 to $46.00 and gave the company a "neutral" rating in a report on Tuesday, October 6th. National Bank Financial set a $49.00 price target on Lincoln National in a research note on Wednesday, October 7th. Weiss Ratings restated a "buy (b)" rating on shares of Lincoln National in a report on Friday, October 30th. Finally, TD Cowen lifted their price objective on Lincoln National from $37.00 to $42.00 and gave the company a "hold" rating in a research report on Wednesday, July 22nd. Seven investment analysts have rated the stock with a Buy rating, five have issued a Hold rating and one has assigned a Sell rating to the company. Based on data from MarketBeat.com, Lincoln National currently has an average rating of "Hold" and a consensus target price of $48.67.

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.

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