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Lincoln National (LNC) Earnings to Gain from Retirement Plan

Lincoln National Corp. LNC is scheduled to report third-quarter results on Nov 1, after market close.

The company’s Retirement Plan Service segment is expected to show growth in deposits, net flows and earnings. This will be driven by higher sales growth from, product enhancements that are focused on simple and transparent pricing, improved customer service and strong retention. The Zacks Consensus Estimate for income from operation for the segment is $34.75 million, which reflects year-over-year growth of 8.6%.

Other Developments in Q3  

Increased Top Line From Life Insurance Unit: Lincoln National’s life insurance business is expected to see top-line growth from a broad product portfolio and an industry-leading distribution network. The company has changed in its sales mix to fight the low interest rate environment. Its strategic focus is to decrease the portion of sales from products with long-term guarantees and increase the share of earnings coming from the mortality and morbidity business lines.

Increased Sales in Group Protection Unit: The company’s Group Protection segment which was challenged in the recent past is now recovering. Sales in 2016 were up nearly 18% and 11% in the first half of 2017. This strong sales growth indicates the resilience of its distribution channel. The company’s pricing remains disciplined and its outlook for sales growth is aligned with its long-term target of mid single-digit increases. We expect sales growth and improving persistency to contribute to third-quarter results.

Annuity Sales to Rise: We also expect to see an increase in total annuity sales driven by product enhancements that have been well received in the marketplace. New product launches and upgrades to existing ones will further aid annuity sales.

Increased Expenses: In the fourth quarter of 2016, the company announced its digital initiative targeted at improving customer experience. These efforts will result in significant cost savings over time as well as potential revenue enhancements, but will cause the company to incur digitization expense of roughly $10 million a quarter in 2017.

Balance Sheet Strength and Capital Management: Its disciplined capital management by way of share buyback will drive the bottom line. Lincoln National’s balance sheet strength and solid capital generation, which enables it to buy back shares, will provide extra support to the bottom line.

Lincoln National Corporation Price and EPS Surprise

Here is what our quantitative model predicts:

Our proven model shows that Lincoln National has the right combination of the two key ingredients to beat earnings estimates.

Zacks ESP:   Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +0.05%. The positive ESP is a meaningful indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter . 

Zacks Rank: Lincoln National carries a Zacks Rank #2 (Buy). Note that stocks with a Zacks Rank of #1, 2 or 3 have a significantly higher chance of beating on earnings.

Other Stocks to Consider

Here are some other companies that you may consider as these too have the right combination of elements to post an earnings beat this quarter:  

Intercontinental Exchange Inc. ICE will report third-quarter 2017 earnings results on Nov 2. The company has an Earnings ESP of +0.19% and a Zacks Rank #3 (Hold). You can see">the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Voya Financial, Inc. VOYA has an Earnings ESP of +1.02% and a Zacks Rank #3. The company is expected to report third-quarter earnings results on Oct 31.

Western Union Co. WU has an Earnings ESP of +1.51% and a Zacks Rank #3. The company is expected to report third-quarter earnings results on Nov 2.

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Lincoln National Corporation (LNC): Free Stock Analysis Report
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