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Lincoln National (LNC) Up 3.1% Since Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Lincoln National Corporation (LNC - Free Report) . Shares have added about 3.1% in that time frame, underperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Lincoln National Beats on Q4 Earnings and Revenues
Lincoln National’s fourth-quarter 2016 operating net income of $1.77 per share surpassed the Zacks Consensus Estimate of $1.71 by 3.5%. The bottom line also increased 15% year over year on the back of higher revenues. For 2016, operating net income improved 19% year over year to $6.50 per share.
In the fourth quarter, Lincoln National’s operating revenues grew 5% year over year to $3.52 billion. The top line also beat the Zacks Consensus Estimate of $3.46 billion by 1.7%. However, for 2016, the metric has gone down nominally by 0.4% over the last year.
Quarterly Segment Details:
Annuities
Operating income remained flat year over year at $242 million. Gross annuity deposits plunged 40% to $1.8 billion due to a decrease in variable annuity sales. Variable annuity sales dropped 6.7% year over year due to the negative impact of various market factors. Variable annuity sales from products without living benefits increased 600 basis points (bps) to 34%. Fixed annuity sales of $411 million also remained flat with the prior-year quarter.
Retirement Plan Services
Operating income inched up 3% from the prior-year quarter to $34 million driven by higher average account balances. Total deposits grew 15% year over year to $2.4 billion due to strong first-year sales in both the small and mid-large markets.
Life Insurance
Operating income grew 29% to $154 million from the year-ago quarter due to favorable mortality results and variable investment income. Total Life insurance sales jumped 17% year over year to $231 million. Life insurance in-force improved 5% year over year to $693 billion.
Group Protection
Operating income grew 23% from the year-ago quarter to $16 million. The upside was driven by loss ratio improvement across all product lines. Sales in this segment increased 18% to $263 million.
Financial Update
As of Dec 31, 2016, Lincoln National’s book value per share, excluding accumulated other comprehensive income, climbed 9% year over year to $57.05 per share.
Total capital returned to shareholders was $261 million in the fourth quarter and $1.1 billion in 2016.
For 2016, operating return on equity, excluding accumulated other comprehensive income, grew 100 bps year over year to 12%.
Share Repurchase and Dividend Update During the quarter, the company repurchased 3.2 million shares for $204 million. The quarter’s average diluted share count of 230.9 million was down 7% from the fourth quarter of 2015. This was due to the repurchase of 19.3 million shares at a cost of $879 million since December 31, 2015.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimate flatlined during the past month. There has been one upward revision for the current quarter compared to one downward.
At this time, Lincoln National's stock has a poor Growth Score of 'F', however its Momentum is doing a lot better with an 'A'. Charting a somewhat similar path, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is equally suitable for value and momentum investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Lincoln National (LNC) Up 3.1% Since Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Lincoln National Corporation (LNC - Free Report) . Shares have added about 3.1% in that time frame, underperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Lincoln National Beats on Q4 Earnings and Revenues
Lincoln National’s fourth-quarter 2016 operating net income of $1.77 per share surpassed the Zacks Consensus Estimate of $1.71 by 3.5%. The bottom line also increased 15% year over year on the back of higher revenues. For 2016, operating net income improved 19% year over year to $6.50 per share.
In the fourth quarter, Lincoln National’s operating revenues grew 5% year over year to $3.52 billion. The top line also beat the Zacks Consensus Estimate of $3.46 billion by 1.7%. However, for 2016, the metric has gone down nominally by 0.4% over the last year.
Quarterly Segment Details:
Annuities
Operating income remained flat year over year at $242 million. Gross annuity deposits plunged 40% to $1.8 billion due to a decrease in variable annuity sales. Variable annuity sales dropped 6.7% year over year due to the negative impact of various market factors. Variable annuity sales from products without living benefits increased 600 basis points (bps) to 34%. Fixed annuity sales of $411 million also remained flat with the prior-year quarter.
Retirement Plan Services
Operating income inched up 3% from the prior-year quarter to $34 million driven by higher average account balances. Total deposits grew 15% year over year to $2.4 billion due to strong first-year sales in both the small and mid-large markets.
Life Insurance
Operating income grew 29% to $154 million from the year-ago quarter due to favorable mortality results and variable investment income. Total Life insurance sales jumped 17% year over year to $231 million. Life insurance in-force improved 5% year over year to $693 billion.
Group Protection
Operating income grew 23% from the year-ago quarter to $16 million. The upside was driven by loss ratio improvement across all product lines. Sales in this segment increased 18% to $263 million.
Financial Update
As of Dec 31, 2016, Lincoln National’s book value per share, excluding accumulated other comprehensive income, climbed 9% year over year to $57.05 per share.
Total capital returned to shareholders was $261 million in the fourth quarter and $1.1 billion in 2016.
For 2016, operating return on equity, excluding accumulated other comprehensive income, grew 100 bps year over year to 12%.
Share Repurchase and Dividend Update
During the quarter, the company repurchased 3.2 million shares for $204 million. The quarter’s average diluted share count of 230.9 million was down 7% from the fourth quarter of 2015. This was due to the repurchase of 19.3 million shares at a cost of $879 million since December 31, 2015.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimate flatlined during the past month. There has been one upward revision for the current quarter compared to one downward.
Lincoln National Corporation Price and Consensus
Lincoln National Corporation Price and Consensus | Lincoln National Corporation Quote
VGM Scores
At this time, Lincoln National's stock has a poor Growth Score of 'F', however its Momentum is doing a lot better with an 'A'. Charting a somewhat similar path, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is equally suitable for value and momentum investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.