Investment Thesis — Lincoln National Corporation
Lincoln National Corporation is being overlooked due to recent underperformance and sector headwinds, but its rock-bottom valuation and capital discipline set the stage for a sharp re-rating. Investors are overly focused on legacy liabilities and ignoring the company's improving risk profile and potential for earnings normalization. The market is missing the upside from management's strategic repositioning and the likely stabilization of interest rates.
Catalysts
- Completion of additional risk transfer/reinsurance deals
- Resumption of share buybacks or dividend increases
- Sustained improvement in interest rates boosting investment income
Risk Factors
- Adverse development in legacy variable annuity liabilities
- Sharp decline in equity markets impacting capital and earnings
- Regulatory changes increasing capital requirements or restricting capital return
Key Debates
LNC's 4.26x Fwd P/E re-rates to 6x by Q4 2024.
10.1% revenue growth drives 15% EPS growth by Q3 2024.
Oversold RSI 30.60 signals 20%+ rebound by Q3 2024.