Why Lincoln National (LNC) Offers Convincing Value for Long-Term Investors

Lincoln National (LNC), a leading player in the insurance sector, presents a compelling case for long-term investors seeking undervalued assets with robust earnings momentum and strategic growth potential. By analyzing its valuation metrics, earnings trajectory, and strategic initiatives, it becomes evident that LNC is poised to deliver outsized returns in the coming years.

Attractive Valuation Metrics: A Discount to Industry Averages

Lincoln National's valuation metrics in 2025 suggest significant undervaluation relative to both historical benchmarks and industry peers. As of October 30, 2025, the company's trailing price-to-earnings (P/E) ratio stands at 4.0, a 47% discount to its 5-year quarterly average of 6.9 and 9% below the last four quarters' average. This stark deviation indicates that the market may be underappreciating LNC's earnings potential.

The price-to-book (P/B) ratio further underscores this undervaluation. At 0.7, LNC's P/B is 5% below the 5-year quarterly average of 0.8 and significantly lower than the 2.33 average for the property and casualty (Prop/Cas.) insurance sub-sector as of January 2025. This discrepancy highlights a potential disconnect between LNC's intrinsic value and its market price.

For enterprise value-to-EBITDA (EV/EBITDA), LNC's FY2025 ratio of 6.66x compares favorably to subsector-specific multiples. For instance, private insurance companies in Q1 2025 traded at 6.2x to 9.9x, with InsurTech firms commanding the highest multiples. While LNC's EV/EBITDA is slightly below the upper end of these ranges, its operating margin of 8.55% (as of November 2025) lags behind competitors like MetLife's 9.35%, suggesting room for operational improvements to narrow this gap.

Earnings Momentum: A Foundation for Sustainable Growth

Lincoln National's earnings trajectory in 2025 reinforces its appeal. The Zacks Consensus Estimate projects earnings of $7.89 per share, a 11.6% year-over-year increase. This growth is driven by strong performance in key segments. For example, the Annuities segment reported a 32% year-over-year sales surge in Q3 2025, fueled by demand for spread-based products and favorable equity markets. Similarly, the Life Insurance segment saw operating income nearly quadruple in the same period, supported by stable mortality experience and improved investment returns.

Revenue is forecast to reach $19 billion in 2025, reflecting a balanced approach to growth and profitability. Analysts anticipate that LNC's focus on higher-margin, capital-efficient products will drive profit margins from 5.8% to 7.7% over the next three years. This margin expansion, coupled with digital transformation initiatives, positions LNC to outperform peers in a competitive landscape.

Strategic Growth Drivers: Innovation and Market Expansion

LNC's strategic initiatives in 2025 are designed to unlock long-term value through innovation and market expansion. The company has launched two new private market funds in collaboration with Bain Capital and Partners Group: the Lincoln Bain Capital Total Credit Fund and the Lincoln Partners Group Royalty Fund. These funds offer access to diversified private credit and royalty portfolios, addressing evolving client demand for alternative investments. The Royalty Fund, which debuted in September 2025, spans sectors like pharmaceuticals, music, and energy transition, further broadening LNC's product offerings.

These partnerships underscore LNC's commitment to leveraging external expertise to enhance its competitive edge. By expanding into private markets and royalties, LNC is not only diversifying its revenue streams but also aligning with broader industry trends toward alternative assets. Additionally, the company's investment in digital tools to improve customer experience and distribution productivity reinforces its ability to scale efficiently in a digital-first era.

Conclusion: A Compelling Investment Thesis

Lincoln National's combination of attractive valuation metrics, strong earnings momentum, and strategic innovation creates a robust investment case. Its undervalued stock, supported by industry-leading growth in key segments and a proactive approach to market expansion, positions LNC as a standout opportunity for long-term investors. As the company continues to execute on its strategic initiatives, it is well-positioned to deliver both capital appreciation and sustainable profitability.