NEW YORK (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, revenue growth and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins.
Highlights from the ratings report include:
- LINCOLN NATIONAL CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, LINCOLN NATIONAL CORP turned its bottom line around by earning $2.44 versus -$1.87 in the prior year. This year, the market expects an improvement in earnings ($4.13 versus $2.44).
- LNC's revenue growth trails the industry average of 20.7%. Since the same quarter one year prior, revenues slightly increased by 7.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Insurance industry and the overall market on the basis of return on equity, LINCOLN NATIONAL CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- The gross profit margin for LINCOLN NATIONAL CORP is rather low; currently it is at 18.40%. Regardless of LNC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, LNC's net profit margin of 11.60% compares favorably to the industry average.
- LNC has underperformed the S&P 500 Index, declining 9.83% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
Lincoln National Corporation, through its subsidiaries, engages in multiple insurance and retirement businesses in the United States. It sells a range of wealth protection, accumulation, and retirement income products and solutions. The company has a P/E ratio of 5.8, below the average insurance industry P/E ratio of six and below the S&P 500 P/E ratio of 17.7. Lincoln National Corp (Radnor PA has a market cap of $6.3 billion and is part of the
industry. Shares are down 30% year to date as of the close of trading on Monday.
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