Lincoln National (LNC): Neutral Signal – What's Next?

Lincoln National Corporation ('LNC') is a holding company offering wealth accumulation, wealth protection, group protection, and retirement income products. Its core business segments include Annuities, offering variable, fixed, and registered index-linked annuities ('RILA'); Life Insurance, providing term, universal ('UL'), indexed universal ('IUL'), and variable universal ('VUL') life insurance, as well as linked-benefit products; Group Protection, offering disability insurance, absence management, term life, accident, critical illness, hospital indemnity, dental, and vision products; and Retirement Plan Services, providing retirement plan products and services, including 'LINCOLN DIRECTOR SM' group variable annuity, 'LINCOLN ALLIANCE ®' program, and 'Multi-Fund ®' variable annuity. LNC targets a wide range of customers, including individuals, employer groups of all sizes, and retirement plan sponsors. The company differentiates itself through a technology-enabled, people-connected service model and a broad distribution network, focusing on providing financial protection and security to its customers.

LNC's technical outlook appears mildly bearish. The recent price action shows a decline from a high of $43.30 on September 3rd to a recent close of $40.33, indicating a downtrend. While the price is above the 21-day EMA at $40.12, it is below the 50-day SMA at $40.68. The 200-day SMA is at $36.21. Momentum indicators suggest weakness. The MACD is negative, with the MACD line at 0.169 trending below the signal line at -0.067, and the MACD Histogram is positive, suggesting that negative momentum may be waning. The RSI is at 53.00, indicating neutral momentum but trending downward. The Stochastic Oscillator shows %K at 66.56 and %D at 70.57, suggesting the stock is not overbought, with a recent crossover indicating downward momentum. The ADX is at 17.27, indicating a weak trend. Overall, the combination of price action below key moving averages and weakening momentum suggests a mildly bearish outlook for LNC in the short term. The recent bounce from the $38 level needs to break the 50-day SMA to turn bullish.

Lincoln National Corporation's MD&A reveals a complex financial landscape. For the three months ended September 30, 2025, the Annuities segment saw a rise in income from operations due to higher fee income driven by higher average daily separate account balances, while Life Insurance segment income increased driven by higher net investment income. Group Protection's income also rose due to increased insurance premiums from growth in business in force. However, Other Operations reported an increased loss, attributed to lower net investment income and higher other expenses. Consolidated net income increased, primarily due to gains in net annuity product features driven by capital markets, and lower changes in the fair value of reinsurance-related embedded derivatives. For the nine months ended September 30, 2025, operating activities used cash of $(400) million, compared to $(2.2) billion in 2024. The company closed a stock sale transaction with Bain Capital, selling approximately 18.8 million shares for $825 million, aiming to deploy this capital towards strategic priorities. The Federal Reserve reduced the federal funds rate target range twice during the third quarter of 2025, first to 4.00% to 4.25% and then to 3.75% to 4.00%, and announced the end of its balance sheet reduction program effective December 1, 2025. Management believes it is 'more likely than not' that deferred tax assets will be realized. The company monitors equity market and interest rate conditions daily, rebalancing hedge positions as needed to manage exposure to changes in these factors.

Lincoln Financial's Q2 2025 earnings call projects a moderately bullish outlook, driven by strong performance and strategic progress. Ellen Cooper highlighted that the company's 'momentum is building' with adjusted operating income increasing 32% year-over-year. Group Protection delivered a 'record quarter for earnings and its highest-ever margin', increasing 250 basis points to 12.5%. Annuities also performed well, generating its third highest sales quarter, supported by a diversified product mix. Despite a slight decline in annuity operating income from $297 million to $287 million year-over-year, this was 'partially offset by ongoing growth in our spread income'. Chris Neczypor noted a strong capital position, with an RBC ratio well above 420%, and clarified plans for deploying excess capital, including growing Group benefits and diversifying the annuity mix. While Retirement Plan Services experienced net outflows, the company anticipates 'overall net flows will turn positive in the third quarter'. The company's focus on strategic repositioning and capital deployment suggests continued growth.

LNC's financial performance presents a somewhat positive but inconsistent picture. Revenue has generally increased, starting from $4.114B in Q1 2024 and reaching $4.555B in Q3 2025, although there are fluctuations in between. The gross profit ratio has varied significantly, from a low of 0 in Q3 2025 to a high of 0.44 in Q4 2024, indicating inconsistent profitability. Operating cash flow has also been volatile, with a recent negative value of -$1.141B in Q3 2025, contrasting sharply with the $1.013B in Q2 2025. Total debt decreased slightly from $6.229B in Q1 2024 to $5.772B in Q3 2025. Overall, LNC showcases revenue growth and decreasing debt, but the inconsistent profitability and volatile operating cash flow necessitate careful monitoring. The negative operating cash flow in the latest quarter is a significant concern.

The company presents a moderately bullish investment profile based on its financial data. Revenue has shown consistent growth, indicating a healthy demand for its products or services. Gross margin has remained relatively stable, suggesting efficient cost management. The Return on Equity (ROE) is positive and indicates profitability. The Price-to-Earnings (P/E) ratio suggests that the company may be appropriately valued by the market. The Debt-to-Equity ratio has decreased, reflecting improved financial leverage. The current ratio, which is above 1, indicates sufficient liquidity to meet its short-term obligations. Overall, the company demonstrates a positive trend in revenue growth, profitability, and financial stability, making it a reasonably attractive investment for the next 6-12 months.