Will Lincoln National (LNC) Beat the Earnings Ests Again? - Analyst Blog

Lincoln National Corporation LNC is set to report first-quarter 2014 results on April 30, 2014. Last quarter, it posted a 9.38% surprise. Let's see how things are shaping up for this announcement.

Factors this Past Quarter

Lincoln National has taken a number of steps in the past quarter to improve its operations, which should help the company perform better going forward. Lincoln National had launched a number of products that include the rollout of AdviceNextSM in Jan 2014 and Lincoln MoneyGuard® II in March 2014. While AdviceNextSM is aimed at providing advisors an access to integrated tools and technologies to better serve clients, MoneyGuard® II enhances the long-term care funding solutions business. However, declining cash flow raises concern regarding Lincoln National's execution of inorganic growth strategies. Lower-than-expected investment income and reduced realized gains due to a low interest rate environment further affect earnings visibility.

Further, in April 2014, the launch of the innovative motor vehicle accident coverage, a 15.6% nationwide expansion of its dental network – Lincoln DentalConnect® and the selection by the Washington Metropolitan Area Transit Authority (with 6,200 plan participants) to provide its employer-sponsored 457(b) plan program were significant positives. All these efforts are expected to help Lincoln National generate more revenues through an expanded client base.

Earnings Whispers?

Our proven model does not conclusively show that Lincoln National is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zero Zacks ESP:  That is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.30 per share, making the difference 0.00%.

Zacks Rank #3 (Hold): Lincoln National's Zacks Rank #3 increases the predictive power of ESP, but when combined with a zero ESP, it makes surprise prediction difficult.

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing zero or negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:  

Primerica, Inc. PRI with Earnings ESP of +1.22% and Zacks Rank #2 (Buy).

Sun Life Financial Inc. SLF with Earnings ESP of +3.08% and Zacks Rank #2.

American International Group Inc. AIG with Earnings ESP of +0.94% and Zacks Rank #3.