Ticker: LNC, Buy below $66.
Lincoln National is a Fortune 250 American holding company, which operates multiple insurance and investment management businesses.
Why I Would Buy
- Cheap – LNC is currently selling for > 8x trailing earnings and forward earnings.
- Below Book – The stock can be purchased below it’s book value (P/B: 0.93).
- Return on Equity – RoE has been at a high single digit level for the past decade.
- Low Payout Ratio – The dividend is a respectable 2%, but a payout ratio below 20% affords plenty of opportunity for future dividend growth.
- Strong Buyback – Management has announced an aggressive share buyback program, which is likely to be accretive to shareholders given the low valuations of the stock.
What Could Go Wrong
- Credit Rating – Long term debt of LNC is rated BBB+ by S&P, I would’ve liked higher ratings.
- RoE – Although decent, consistent double digit returns would’ve made the stock more attractive
- Relative Valuation – Not particularly cheap when compared to other large life insurers.
Disclosure: I am long LNC, please read additional disclosures here before taking any action based on this post.