Intrinsic value of Lincoln National - LNC

Previous Close

$75.85

  Intrinsic Value

$233.52

stock screener

  Rating & Target

str. buy

+208%

Previous close

$75.85

 
Intrinsic value

$233.52

 
Up/down potential

+208%

 
Rating

str. buy

Our model is not good at valuating stocks of financial companies, such as LNC.

We calculate the intrinsic value of LNC stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 16.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -1.29
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.00
  5.90
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.32
  5.28
  5.26
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
  5.12
  5.11
  5.10
Revenue, $m
  0
  14,464
  15,460
  16,496
  17,574
  18,695
  19,861
  21,076
  22,341
  23,660
  25,036
  26,471
  27,969
  29,533
  31,168
  32,876
  34,662
  36,530
  38,484
  40,530
  42,671
  44,914
  47,262
  49,723
  52,302
  55,005
  57,838
  60,808
  63,923
  67,189
  70,615
Variable operating expenses, $m
 
  12,611
  13,464
  14,351
  15,273
  16,233
  17,232
  18,272
  19,355
  20,485
  21,662
  22,664
  23,946
  25,286
  26,685
  28,147
  29,676
  31,276
  32,949
  34,700
  36,534
  38,454
  40,465
  42,572
  44,779
  47,093
  49,519
  52,062
  54,729
  57,525
  60,459
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  11,666
  12,611
  13,464
  14,351
  15,273
  16,233
  17,232
  18,272
  19,355
  20,485
  21,662
  22,664
  23,946
  25,286
  26,685
  28,147
  29,676
  31,276
  32,949
  34,700
  36,534
  38,454
  40,465
  42,572
  44,779
  47,093
  49,519
  52,062
  54,729
  57,525
  60,459
Operating income, $m
  1,839
  1,853
  1,996
  2,145
  2,300
  2,462
  2,629
  2,804
  2,986
  3,176
  3,374
  3,807
  4,023
  4,248
  4,483
  4,729
  4,985
  5,254
  5,535
  5,829
  6,137
  6,460
  6,798
  7,152
  7,523
  7,911
  8,319
  8,746
  9,194
  9,664
  10,157
EBITDA, $m
  1,839
  2,088
  2,231
  2,381
  2,536
  2,698
  2,867
  3,042
  3,225
  3,415
  3,613
  3,821
  4,037
  4,263
  4,498
  4,745
  5,003
  5,272
  5,554
  5,850
  6,159
  6,482
  6,821
  7,177
  7,549
  7,939
  8,348
  8,777
  9,226
  9,697
  10,192
Interest expense (income), $m
  274
  267
  427
  1,289
  2,186
  3,118
  4,088
  5,097
  6,149
  7,244
  8,385
  9,575
  10,817
  12,114
  13,467
  14,882
  16,360
  17,906
  19,522
  21,213
  22,983
  24,837
  26,777
  28,810
  30,940
  33,171
  35,510
  37,962
  40,532
  43,228
  46,054
Earnings before tax, $m
  1,458
  1,586
  1,570
  856
  115
  -656
  -1,458
  -2,293
  -3,162
  -4,068
  -5,011
  -5,768
  -6,795
  -7,866
  -8,985
  -10,153
  -11,375
  -12,651
  -13,987
  -15,384
  -16,846
  -18,377
  -19,979
  -21,658
  -23,417
  -25,260
  -27,191
  -29,216
  -31,338
  -33,564
  -35,898
Tax expense, $m
  266
  428
  424
  231
  31
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  1,192
  1,158
  1,146
  625
  84
  -656
  -1,458
  -2,293
  -3,162
  -4,068
  -5,011
  -5,768
  -6,795
  -7,866
  -8,985
  -10,153
  -11,375
  -12,651
  -13,987
  -15,384
  -16,846
  -18,377
  -19,979
  -21,658
  -23,417
  -25,260
  -27,191
  -29,216
  -31,338
  -33,564
  -35,898

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  261,627
  278,151
  297,316
  317,239
  337,957
  359,512
  381,945
  405,305
  429,641
  455,007
  481,460
  509,058
  537,865
  567,949
  599,378
  632,226
  666,571
  702,494
  740,079
  779,415
  820,597
  863,722
  908,893
  956,217
  1,005,808
  1,057,783
  1,112,267
  1,169,389
  1,229,286
  1,292,102
  1,357,985
Adjusted assets (=assets-cash), $m
  261,627
  278,151
  297,316
  317,239
  337,957
  359,512
  381,945
  405,305
  429,641
  455,007
  481,460
  509,058
  537,865
  567,949
  599,378
  632,226
  666,571
  702,494
  740,079
  779,415
  820,597
  863,722
  908,893
  956,217
  1,005,808
  1,057,783
  1,112,267
  1,169,389
  1,229,286
  1,292,102
  1,357,985
Revenue / Adjusted assets
  0.000
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
Average production assets, $m
  64
  72
  77
  82
  88
  93
  99
  105
  112
  118
  125
  132
  140
  148
  156
  164
  173
  183
  192
  203
  213
  225
  236
  249
  262
  275
  289
  304
  320
  336
  353
Working capital, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total debt, $m
  5,345
  8,532
  25,780
  43,711
  62,358
  81,756
  101,947
  122,971
  144,873
  167,703
  191,510
  216,348
  242,275
  269,350
  297,636
  327,200
  358,110
  390,440
  424,267
  459,670
  496,733
  535,546
  576,199
  618,791
  663,423
  710,200
  759,236
  810,646
  864,554
  921,088
  980,382
Total liabilities, $m
  247,149
  250,336
  267,584
  285,515
  304,162
  323,560
  343,751
  364,775
  386,677
  409,507
  433,314
  458,152
  484,079
  511,154
  539,440
  569,004
  599,914
  632,244
  666,071
  701,474
  738,537
  777,350
  818,003
  860,595
  905,227
  952,004
  1,001,040
  1,052,450
  1,106,358
  1,162,892
  1,222,186
Total equity, $m
  14,478
  27,815
  29,732
  31,724
  33,796
  35,951
  38,195
  40,531
  42,964
  45,501
  48,146
  50,906
  53,787
  56,795
  59,938
  63,223
  66,657
  70,249
  74,008
  77,942
  82,060
  86,372
  90,889
  95,622
  100,581
  105,778
  111,227
  116,939
  122,929
  129,210
  135,798
Total liabilities and equity, $m
  261,627
  278,151
  297,316
  317,239
  337,958
  359,511
  381,946
  405,306
  429,641
  455,008
  481,460
  509,058
  537,866
  567,949
  599,378
  632,227
  666,571
  702,493
  740,079
  779,416
  820,597
  863,722
  908,892
  956,217
  1,005,808
  1,057,782
  1,112,267
  1,169,389
  1,229,287
  1,292,102
  1,357,984
Debt-to-equity ratio
  0.369
  0.310
  0.870
  1.380
  1.850
  2.270
  2.670
  3.030
  3.370
  3.690
  3.980
  4.250
  4.500
  4.740
  4.970
  5.180
  5.370
  5.560
  5.730
  5.900
  6.050
  6.200
  6.340
  6.470
  6.600
  6.710
  6.830
  6.930
  7.030
  7.130
  7.220
Adjusted equity ratio
  0.055
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,192
  1,158
  1,146
  625
  84
  -656
  -1,458
  -2,293
  -3,162
  -4,068
  -5,011
  -5,768
  -6,795
  -7,866
  -8,985
  -10,153
  -11,375
  -12,651
  -13,987
  -15,384
  -16,846
  -18,377
  -19,979
  -21,658
  -23,417
  -25,260
  -27,191
  -29,216
  -31,338
  -33,564
  -35,898
Depreciation, amort., depletion, $m
  0
  235
  235
  236
  236
  237
  237
  238
  238
  239
  240
  13
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
  28
  29
  30
  32
  34
  35
Funds from operations, $m
  2,223
  1,392
  1,381
  861
  320
  -420
  -1,221
  -2,055
  -2,924
  -3,829
  -4,772
  -5,755
  -6,781
  -7,851
  -8,969
  -10,137
  -11,357
  -12,633
  -13,968
  -15,364
  -16,825
  -18,354
  -19,956
  -21,633
  -23,391
  -25,232
  -27,162
  -29,185
  -31,306
  -33,530
  -35,862
Change in working capital, $m
  951
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from operations, $m
  1,272
  1,392
  1,381
  861
  320
  -420
  -1,221
  -2,055
  -2,924
  -3,829
  -4,772
  -5,755
  -6,781
  -7,851
  -8,969
  -10,137
  -11,357
  -12,633
  -13,968
  -15,364
  -16,825
  -18,354
  -19,956
  -21,633
  -23,391
  -25,232
  -27,162
  -29,185
  -31,306
  -33,530
  -35,862
Maintenance CAPEX, $m
  0
  -6
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -28
  -29
  -30
  -32
  -34
New CAPEX, $m
  0
  -8
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -16
  -17
Cash from investing activities, $m
  -3,666
  -14
  -12
  -13
  -13
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -20
  -22
  -23
  -25
  -25
  -26
  -28
  -29
  -31
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -51
Free cash flow, $m
  -2,394
  1,377
  1,369
  848
  306
  -434
  -1,236
  -2,071
  -2,941
  -3,847
  -4,790
  -5,775
  -6,801
  -7,873
  -8,992
  -10,161
  -11,383
  -12,660
  -13,996
  -15,393
  -16,856
  -18,387
  -19,990
  -21,669
  -23,429
  -25,272
  -27,204
  -29,229
  -31,352
  -33,578
  -35,913
Issuance/(repayment) of debt, $m
  -205
  3,187
  17,248
  17,931
  18,647
  19,399
  20,190
  21,024
  21,903
  22,829
  23,807
  24,839
  25,927
  27,075
  28,286
  29,564
  30,910
  32,330
  33,826
  35,403
  37,064
  38,812
  40,654
  42,592
  44,632
  46,778
  49,035
  51,410
  53,908
  56,534
  59,295
Issuance/(repurchase) of shares, $m
  -853
  12,179
  771
  1,367
  1,988
  2,812
  3,702
  4,629
  5,596
  6,604
  7,657
  8,528
  9,675
  10,874
  12,128
  13,438
  14,809
  16,244
  17,745
  19,318
  20,964
  22,689
  24,497
  26,391
  28,376
  30,457
  32,640
  34,928
  37,328
  39,845
  42,486
Cash from financing (excl. dividends), $m  
  2,208
  15,366
  18,019
  19,298
  20,635
  22,211
  23,892
  25,653
  27,499
  29,433
  31,464
  33,367
  35,602
  37,949
  40,414
  43,002
  45,719
  48,574
  51,571
  54,721
  58,028
  61,501
  65,151
  68,983
  73,008
  77,235
  81,675
  86,338
  91,236
  96,379
  101,781
Total cash flow (excl. dividends), $m
  -186
  16,744
  19,387
  20,146
  20,941
  21,777
  22,656
  23,582
  24,558
  25,587
  26,673
  27,592
  28,801
  30,076
  31,422
  32,841
  34,337
  35,914
  37,576
  39,327
  41,172
  43,115
  45,160
  47,313
  49,579
  51,963
  54,471
  57,109
  59,883
  62,801
  65,868
Retained Cash Flow (-), $m
  -861
  -13,337
  -1,916
  -1,992
  -2,072
  -2,812
  -3,702
  -4,629
  -5,596
  -6,604
  -7,657
  -8,528
  -9,675
  -10,874
  -12,128
  -13,438
  -14,809
  -16,244
  -17,745
  -19,318
  -20,964
  -22,689
  -24,497
  -26,391
  -28,376
  -30,457
  -32,640
  -34,928
  -37,328
  -39,845
  -42,486
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  3,407
  17,471
  18,153
  18,869
  18,965
  18,954
  18,952
  18,962
  18,983
  19,017
  19,064
  19,125
  19,202
  19,294
  19,403
  19,528
  19,670
  19,831
  20,010
  20,208
  20,426
  20,664
  20,923
  21,203
  21,506
  21,832
  22,181
  22,555
  22,955
  23,382
Discount rate, %
 
  7.30
  7.67
  8.05
  8.45
  8.87
  9.32
  9.78
  10.27
  10.79
  11.32
  11.89
  12.49
  13.11
  13.77
  14.45
  15.18
  15.93
  16.73
  17.57
  18.45
  19.37
  20.34
  21.35
  22.42
  23.54
  24.72
  25.96
  27.25
  28.62
  30.05
PV of cash for distribution, $m
 
  3,175
  15,072
  14,391
  13,640
  12,398
  11,106
  9,861
  8,673
  7,551
  6,505
  5,539
  4,661
  3,871
  3,172
  2,561
  2,036
  1,593
  1,224
  924
  684
  496
  352
  244
  165
  109
  70
  44
  26
  16
  9
Current shareholders' claim on cash, %
  100
  58.0
  56.6
  54.5
  51.7
  48.2
  44.3
  40.1
  35.8
  31.6
  27.6
  24.0
  20.6
  17.5
  14.8
  12.4
  10.3
  8.5
  7.0
  5.7
  4.6
  3.8
  3.0
  2.4
  1.9
  1.5
  1.2
  0.9
  0.7
  0.6
  0.5

Lincoln National Corporation is a holding company, which operates insurance and retirement businesses through subsidiary companies. The Company sells a range of wealth protection, accumulation and retirement income products and solutions, through its business segments. The Company operates through four segments: Annuities segment, which offers fixed (including indexed) and variable annuities; Retirement Plan Services segment, which provides employers with retirement plan products and services; Life Insurance segment, which focuses on the creation and protection of wealth through life insurance products, and Group Protection, which offers principally group non-medical insurance products. These products include fixed and indexed annuities, variable annuities, universal life insurance, variable universal life insurance, linked-benefit UL, term life insurance, indexed universal life insurance, employer-sponsored retirement plans and services, and group life, disability and dental.

FINANCIAL RATIOS  of  Lincoln National (LNC)

Valuation Ratios
P/E Ratio 14.4
Price to Sales 1.3
Price to Book 1.2
Price to Tangible Book
Price to Cash Flow 13.5
Price to Free Cash Flow 13.5
Growth Rates
Sales Growth Rate -1.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 36.9%
Total Debt to Equity 36.9%
Interest Coverage 6
Management Effectiveness
Return On Assets 0.6%
Ret/ On Assets - 3 Yr. Avg. 0.6%
Return On Total Capital 6.1%
Ret/ On T. Cap. - 3 Yr. Avg. 6.4%
Return On Equity 8.5%
Return On Equity - 3 Yr. Avg. 8.9%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 12.8%
EBITDA Margin - 3 Yr. Avg. 14%
Operating Margin 13.6%
Oper. Margin - 3 Yr. Avg. 14.3%
Pre-Tax Margin 10.8%
Pre-Tax Margin - 3 Yr. Avg. 12%
Net Profit Margin 8.8%
Net Profit Margin - 3 Yr. Avg. 9.5%
Effective Tax Rate 18.2%
Eff/ Tax Rate - 3 Yr. Avg. 20.6%
Payout Ratio 20%

LNC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LNC stock intrinsic value calculation we used $13505 million for the last fiscal year's total revenue generated by Lincoln National. The default revenue input number comes from 2016 income statement of Lincoln National. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our LNC stock valuation model: a) initial revenue growth rate of 7.1% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 7.3%, whose default value for LNC is calculated based on our internal credit rating of Lincoln National, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Lincoln National.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of LNC stock the variable cost ratio is equal to 87.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for LNC stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5% for Lincoln National.

Corporate tax rate of 27% is the nominal tax rate for Lincoln National. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the LNC stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for LNC are equal to 0.5%.

Life of production assets of 10 years is the average useful life of capital assets used in Lincoln National operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for LNC is equal to 0%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $14478 million for Lincoln National - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 221.443 million for Lincoln National is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Lincoln National at the current share price and the inputted number of shares is $16.8 billion.

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COMPANY NEWS

▶ Lincoln National Trying To Close In On Key Technical Measure   [03:00AM  Investor's Business Daily]
▶ Lincoln National beats 3Q profit forecasts   [Nov-01-17 05:16PM  Associated Press]
▶ Going Shorter; Takeaways and Observations: Best of Kass   [Oct-13-17 09:00PM  TheStreet.com]
▶ Lincoln Financial Group to Report Third Quarter Earnings   [Sep-21-17 11:00AM  Business Wire]
▶ Stocks To Watch: Lincoln National Sees RS Rating Jump To 81   [03:00AM  Investor's Business Daily]
▶ Lincoln National Earns Relative Strength Rating Upgrade   [03:00AM  Investor's Business Daily]
▶ Insurance on the Street: What Analysts Think of the Giants   [Sep-15-17 09:08AM  Market Realist]
▶ Stocks Showing Improved Relative Strength: Lincoln National   [03:00AM  Investor's Business Daily]
▶ 6 Undervalued Stocks Based on the Peter Lynch Value   [Aug-03-17 06:26PM  GuruFocus.com]
▶ Lincoln National beats 2Q profit forecasts   [Aug-02-17 10:41PM  Associated Press]
▶ Tesla Remains Substantially Overvalued, Doug Kass Warns   [Jul-10-17 07:15PM  TheStreet.com]
▶ How Some of Kass' Favorite Shorts Are Doing: Best of Kass   [Jul-07-17 04:08PM  TheStreet.com]
▶ Lincoln Financial Group to Report Second Quarter Earnings   [Jun-22-17 11:00AM  Business Wire]
Financial statements of LNC
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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