Opinions
Liz Miller
Lincoln National Corp.
LNC-N
TOP PICK
Sep 26, 2016
Stock price when the opinion was issued
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They changed CEOs a few years ago. The spike in interest rates unsettled their capital ratios, so shares slid in 2022, but they've been building their capital. Are in a steady eddy business, at a 5-6x PE and pays a 5.6% dividend. Has a book value of $47 (shares are below $32). Has recurring cash flow and a great brand. He expects them to raise the dividend and buy back shares.
(Analysts’ price target is $36.46)
LNC is a highly regarded wealth management company offering investment, insurance, annuity and other services. It is expanding its slate by creating unique partnerships, like the recent agreement with a private equity firm. It trades at 4x earnings, under book, and supports a 43% ROE. Cash reserves are growing as shares are bought back and the dividend yield is backed by a payout ratio of 10% of cash flow. We recommend setting a stop at $21, looking to achieve $37 -- upside potential of 21%. Yield 5.9%
(Analysts’ price target is $36.92)
She thinks there is interest in the life and integrated area. In the US there is the department of labour (DOL) ruling and this stock is immune to this ruling. They are well capitalized. It came down with the industry. There is interesting upside going forward.