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Lincoln National Hits 52-Week High Post Solid Q3 Earnings

Within two months, shares of Lincoln National Corp. (LNC) have scaled a new 52-week high at $56.78 on Nov 11, jumping 12.8% since the beginning of 2014. Notably, the stock consistently rose 7.8% in the last nine trading sessions since the third-quarter earnings release on Oct 29.

While about 1.42 million shares exchanged hands in the latest trading session, average volume of shares traded over the last three months stands at approximately 1,908.9K. Yesterday’s closing price represents a modest six-month return of about 13.3%, against 8.6% clocked by the S&P 500 index.

The steady appreciation in stock price is likely being led by continuous earnings accretion and strong capital. Stable fundamental growth also places Lincoln National in a strong competitive position. Moreover, the latest 25% dividend hike along with accelerated share buybacks have reinforced confidence among investors.

Earnings Review

This Zacks Rank #2 (Buy) stock has kept its earnings streak alive by delivering positive earnings surprises in the trailing four quarters, with an impressive average beat of 7.6%. Even the third-quarter 2014 operating earnings of $1.56 per share exceeded the Zacks Consensus Estimate of $1.42 and improved from the year-ago quarter figure of $1.34 per share.

The year-over-year improvement stemmed from the strong distribution network and expansion in product portfolio, resulting in high returns from new businesses. Improved operating results across the Annuities, Retirement Services and Life Insurance segments shored up book value per share and return on equity (:ROE). These positives were partly offset by deterioration in Group Protection.

Rationale

Lincoln National’s prudent enterprise risk management has helped in maintaining a stable and investment portfolio amid low interest rates. Improved pricing, retention and market position have been supporting growth in premiums and fees as well. Alongside, the company’s capital position remains secure, which is complemented by improved financial leverage, overall aiding incremental capital deployment.

Moreover, the long-term growth rate for Lincoln National is pegged at 11.1%, higher than the peer group average of 10%.

Stocks to Consider

Investors interested in life insurance companies could consider American Equity Investment Life Holding Co. (AEL), which hit a 52-week high of $27.84 on Monday. China Life Insurance Co. Ltd. (LFC) and StanCorp Financial Group Inc. (SFG) that scaled 52-week high on Nov 5 are also worth reckoning. All these have the same Zacks Rank as Lincoln National.

Read the Full Research Report on LNC
Read the Full Research Report on LFC
Read the Full Research Report on SFG
Read the Full Research Report on AEL


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