Compelling Reasons to Hold on to Lincoln National Stock Right Now

Core Viewpoint - Lincoln National Corporation (LNC) is experiencing growth driven by a strong Group Protection segment, improved fee income, and effective cost management, alongside a solid financial position [1]. Financial Performance - LNC's stock has increased by 14.1% over the past year [2]. - The Zacks Consensus Estimate for LNC's 2024 earnings is $5.74 per share, reflecting a 10% increase from 2023, with revenues projected at $18.4 billion, a 15% rise from 2023 [2]. - For 2025, earnings are estimated at $7.54 per share, indicating a 31.3% improvement from 2024, with revenues expected to reach $19.1 billion, a 3.5% increase from 2024 [3]. - The return on equity for LNC is currently 17.1%, surpassing the industry average of 15.5% [3]. Business Segments - The Annuities and Group Protection segments are expected to drive revenue growth, supported by higher fee income from variable annuities [4]. - The Annuities segment has seen growth due to increased account values and a strong alternative investment portfolio, with key products contributing to success [5]. - The Group Protection unit is anticipated to benefit from increased scale, broader distribution channels, and acquisitions, with operating income growing by 16.7% year over year in the first half of 2024 [5]. - Lincoln National serves approximately 17 million customers, positioning the company for future sales growth [6]. Strategic Focus - The company is shifting its business mix towards products without long-term guarantees, which are less sensitive to interest rates [6]. - Expense management initiatives have supported margin expansion, while advanced technologies have improved operational scale and customer experience [6]. - A strong financial position, characterized by a rising cash balance, enables Lincoln National to pursue growth initiatives and allocate capital strategically [7]. Challenges - The Life Insurance segment has faced challenges due to elevated mortality and morbidity claims related to the COVID pandemic, leading to a 22.1% year-over-year decline in sales in the first half of 2024 [8]. - The company has a debt-laden balance sheet, with a total debt-to-capital ratio of 43.7%, significantly higher than the industry average of 14.5% [9].