Intrinsic value of Lincoln National - LNC

Previous Close

$64.57

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$64.57

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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
  7.00
  6.80
  6.62
  6.46
  6.31
  6.18
  6.06
  5.96
  5.86
  5.77
  5.70
  5.63
  5.56
  5.51
  5.46
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
  5.14
  5.13
  5.12
  5.10
  5.09
Revenue, $m
  0
  15,255
  16,292
  17,371
  18,493
  19,660
  20,875
  22,141
  23,460
  24,835
  26,269
  27,765
  29,328
  30,960
  32,665
  34,448
  36,312
  38,263
  40,303
  42,439
  44,676
  47,018
  49,472
  52,043
  54,738
  57,562
  60,523
  63,627
  66,882
  70,297
  73,878
Variable operating expenses, $m
 
  13,180
  14,046
  14,947
  15,883
  16,858
  17,873
  18,930
  20,031
  21,179
  22,377
  23,185
  24,489
  25,852
  27,276
  28,765
  30,321
  31,950
  33,654
  35,438
  37,305
  39,261
  41,310
  43,457
  45,707
  48,065
  50,538
  53,130
  55,848
  58,699
  61,689
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
  13,180
  14,046
  14,947
  15,883
  16,858
  17,873
  18,930
  20,031
  21,179
  22,377
  23,185
  24,489
  25,852
  27,276
  28,765
  30,321
  31,950
  33,654
  35,438
  37,305
  39,261
  41,310
  43,457
  45,707
  48,065
  50,538
  53,130
  55,848
  58,699
  61,689
Operating income, $m
  1,839
  2,075
  2,246
  2,424
  2,609
  2,802
  3,002
  3,211
  3,429
  3,656
  3,892
  4,581
  4,839
  5,108
  5,389
  5,683
  5,991
  6,313
  6,649
  7,002
  7,371
  7,757
  8,162
  8,586
  9,031
  9,497
  9,985
  10,497
  11,034
  11,598
  12,188
EBITDA, $m
  1,839
  32,092
  34,274
  36,543
  38,903
  41,358
  43,915
  46,577
  49,352
  52,244
  55,261
  58,410
  61,697
  65,130
  68,718
  72,468
  76,390
  80,492
  84,785
  89,279
  93,984
  98,912
  104,074
  109,483
  115,151
  121,092
  127,321
  133,851
  140,699
  147,882
  155,415
Interest expense (income), $m
  274
  6,107
  5,941
  6,224
  6,518
  6,825
  7,143
  7,475
  7,821
  8,181
  8,556
  8,948
  9,356
  9,783
  10,229
  10,694
  11,181
  11,690
  12,222
  12,780
  13,363
  13,974
  14,613
  15,283
  15,985
  16,721
  17,492
  18,300
  19,148
  20,037
  20,969
Earnings before tax, $m
  1,458
  -4,032
  -3,694
  -3,800
  -3,909
  -4,023
  -4,141
  -4,264
  -4,392
  -4,525
  -4,664
  -4,367
  -4,518
  -4,675
  -4,839
  -5,011
  -5,190
  -5,377
  -5,573
  -5,778
  -5,992
  -6,216
  -6,451
  -6,697
  -6,954
  -7,224
  -7,507
  -7,803
  -8,114
  -8,439
  -8,780
Tax expense, $m
  266
  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
Net income, $m
  1,192
  -4,032
  -3,694
  -3,800
  -3,909
  -4,023
  -4,141
  -4,264
  -4,392
  -4,525
  -4,664
  -4,367
  -4,518
  -4,675
  -4,839
  -5,011
  -5,190
  -5,377
  -5,573
  -5,778
  -5,992
  -6,216
  -6,451
  -6,697
  -6,954
  -7,224
  -7,507
  -7,803
  -8,114
  -8,439
  -8,780

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
  85,702
  91,530
  97,589
  103,892
  110,449
  117,276
  124,387
  131,796
  139,520
  147,577
  155,985
  164,764
  173,932
  183,513
  193,529
  204,002
  214,958
  226,423
  238,424
  250,989
  264,149
  277,934
  292,378
  307,516
  323,382
  340,015
  357,456
  375,744
  394,925
  415,043
Adjusted assets (=assets-cash), $m
  261,627
  85,702
  91,530
  97,589
  103,892
  110,449
  117,276
  124,387
  131,796
  139,520
  147,577
  155,985
  164,764
  173,932
  183,513
  193,529
  204,002
  214,958
  226,423
  238,424
  250,989
  264,149
  277,934
  292,378
  307,516
  323,382
  340,015
  357,456
  375,744
  394,925
  415,043
Revenue / Adjusted assets
  0.000
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
  0.178
Average production assets, $m
  64
  295,748
  315,859
  336,769
  358,518
  381,148
  404,707
  429,244
  454,812
  481,468
  509,272
  538,287
  568,580
  600,221
  633,283
  667,845
  703,987
  741,796
  781,360
  822,773
  866,135
  911,548
  959,120
  1,008,965
  1,061,201
  1,115,954
  1,173,354
  1,233,538
  1,296,650
  1,362,840
  1,432,265
Working capital, $m
  0
  -281,485
  -300,626
  -320,528
  -341,227
  -362,766
  -385,189
  -408,542
  -432,877
  -458,248
  -484,711
  -512,327
  -541,159
  -571,273
  -602,741
  -635,636
  -670,035
  -706,020
  -743,676
  -783,092
  -824,363
  -867,585
  -912,863
  -960,304
  -1,010,022
  -1,062,134
  -1,116,766
  -1,174,047
  -1,234,115
  -1,297,112
  -1,363,190
Total debt, $m
  5,345
  110,012
  115,257
  120,710
  126,382
  132,284
  138,429
  144,828
  151,496
  158,448
  165,700
  173,267
  181,167
  189,419
  198,042
  207,056
  216,482
  226,342
  236,661
  247,461
  258,770
  270,614
  283,021
  296,021
  309,644
  323,924
  338,894
  354,590
  371,050
  388,312
  406,419
Total liabilities, $m
  247,149
  77,132
  82,377
  87,830
  93,502
  99,404
  105,549
  111,948
  118,616
  125,568
  132,820
  140,387
  148,287
  156,539
  165,162
  174,176
  183,602
  193,462
  203,781
  214,581
  225,890
  237,734
  250,141
  263,141
  276,764
  291,044
  306,014
  321,710
  338,170
  355,432
  373,539
Total equity, $m
  14,478
  8,570
  9,153
  9,759
  10,389
  11,045
  11,728
  12,439
  13,180
  13,952
  14,758
  15,599
  16,476
  17,393
  18,351
  19,353
  20,400
  21,496
  22,642
  23,842
  25,099
  26,415
  27,793
  29,238
  30,752
  32,338
  34,002
  35,746
  37,574
  39,492
  41,504
Total liabilities and equity, $m
  261,627
  85,702
  91,530
  97,589
  103,891
  110,449
  117,277
  124,387
  131,796
  139,520
  147,578
  155,986
  164,763
  173,932
  183,513
  193,529
  204,002
  214,958
  226,423
  238,423
  250,989
  264,149
  277,934
  292,379
  307,516
  323,382
  340,016
  357,456
  375,744
  394,924
  415,043
Debt-to-equity ratio
  0.369
  12.840
  12.590
  12.370
  12.160
  11.980
  11.800
  11.640
  11.490
  11.360
  11.230
  11.110
  11.000
  10.890
  10.790
  10.700
  10.610
  10.530
  10.450
  10.380
  10.310
  10.240
  10.180
  10.120
  10.070
  10.020
  9.970
  9.920
  9.880
  9.830
  9.790
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
  -4,032
  -3,694
  -3,800
  -3,909
  -4,023
  -4,141
  -4,264
  -4,392
  -4,525
  -4,664
  -4,367
  -4,518
  -4,675
  -4,839
  -5,011
  -5,190
  -5,377
  -5,573
  -5,778
  -5,992
  -6,216
  -6,451
  -6,697
  -6,954
  -7,224
  -7,507
  -7,803
  -8,114
  -8,439
  -8,780
Depreciation, amort., depletion, $m
  0
  30,017
  32,028
  34,119
  36,293
  38,557
  40,912
  43,366
  45,923
  48,589
  51,369
  53,829
  56,858
  60,022
  63,328
  66,784
  70,399
  74,180
  78,136
  82,277
  86,613
  91,155
  95,912
  100,896
  106,120
  111,595
  117,335
  123,354
  129,665
  136,284
  143,227
Funds from operations, $m
  2,223
  25,985
  28,333
  30,319
  32,384
  34,534
  36,771
  39,102
  41,531
  44,063
  46,705
  49,462
  52,340
  55,347
  58,489
  61,774
  65,209
  68,802
  72,563
  76,499
  80,621
  84,938
  89,461
  94,200
  99,166
  104,371
  109,829
  115,551
  121,551
  127,845
  134,446
Change in working capital, $m
  951
  -18,415
  -19,141
  -19,901
  -20,700
  -21,539
  -22,423
  -23,354
  -24,335
  -25,371
  -26,463
  -27,616
  -28,832
  -30,115
  -31,468
  -32,895
  -34,399
  -35,985
  -37,656
  -39,416
  -41,270
  -43,223
  -45,278
  -47,441
  -49,717
  -52,112
  -54,632
  -57,281
  -60,068
  -62,997
  -66,078
Cash from operations, $m
  1,272
  44,400
  47,474
  50,220
  53,084
  56,073
  59,194
  62,456
  65,866
  69,434
  73,168
  77,077
  81,172
  85,462
  89,957
  94,668
  99,608
  104,787
  110,219
  115,916
  121,892
  128,161
  134,739
  141,641
  148,883
  156,484
  164,460
  172,832
  181,619
  190,842
  200,524
Maintenance CAPEX, $m
  0
  -27,640
  -29,575
  -31,586
  -33,677
  -35,852
  -38,115
  -40,471
  -42,924
  -45,481
  -48,147
  -50,927
  -53,829
  -56,858
  -60,022
  -63,328
  -66,784
  -70,399
  -74,180
  -78,136
  -82,277
  -86,613
  -91,155
  -95,912
  -100,896
  -106,120
  -111,595
  -117,335
  -123,354
  -129,665
  -136,284
New CAPEX, $m
  0
  -19,347
  -20,111
  -20,910
  -21,749
  -22,630
  -23,559
  -24,537
  -25,568
  -26,656
  -27,804
  -29,015
  -30,293
  -31,641
  -33,062
  -34,562
  -36,142
  -37,808
  -39,564
  -41,414
  -43,362
  -45,413
  -47,572
  -49,845
  -52,237
  -54,753
  -57,400
  -60,184
  -63,112
  -66,190
  -69,426
Cash from investing activities, $m
  -3,666
  -46,987
  -49,686
  -52,496
  -55,426
  -58,482
  -61,674
  -65,008
  -68,492
  -72,137
  -75,951
  -79,942
  -84,122
  -88,499
  -93,084
  -97,890
  -102,926
  -108,207
  -113,744
  -119,550
  -125,639
  -132,026
  -138,727
  -145,757
  -153,133
  -160,873
  -168,995
  -177,519
  -186,466
  -195,855
  -205,710
Free cash flow, $m
  -2,394
  -2,588
  -2,212
  -2,275
  -2,341
  -2,410
  -2,480
  -2,552
  -2,627
  -2,704
  -2,783
  -2,865
  -2,950
  -3,037
  -3,128
  -3,222
  -3,319
  -3,420
  -3,525
  -3,634
  -3,747
  -3,865
  -3,988
  -4,116
  -4,250
  -4,389
  -4,535
  -4,687
  -4,846
  -5,012
  -5,186
Issuance/(repayment) of debt, $m
  -264
  -3,077
  5,245
  5,453
  5,672
  5,902
  6,144
  6,399
  6,668
  6,952
  7,251
  7,567
  7,900
  8,252
  8,623
  9,014
  9,426
  9,861
  10,318
  10,801
  11,309
  11,844
  12,407
  13,000
  13,623
  14,280
  14,970
  15,696
  16,460
  17,262
  18,106
Issuance/(repurchase) of shares, $m
  -853
  12,602
  4,277
  4,406
  4,539
  4,679
  4,824
  4,975
  5,133
  5,298
  5,470
  5,208
  5,396
  5,592
  5,798
  6,013
  6,237
  6,473
  6,720
  6,978
  7,249
  7,532
  7,830
  8,141
  8,468
  8,811
  9,170
  9,547
  9,942
  10,357
  10,792
Cash from financing (excl. dividends), $m  
  2,208
  9,525
  9,522
  9,859
  10,211
  10,581
  10,968
  11,374
  11,801
  12,250
  12,721
  12,775
  13,296
  13,844
  14,421
  15,027
  15,663
  16,334
  17,038
  17,779
  18,558
  19,376
  20,237
  21,141
  22,091
  23,091
  24,140
  25,243
  26,402
  27,619
  28,898
Total cash flow (excl. dividends), $m
  -186
  6,937
  7,311
  7,584
  7,870
  8,171
  8,488
  8,822
  9,175
  9,546
  9,938
  9,910
  10,347
  10,807
  11,293
  11,805
  12,344
  12,914
  13,513
  14,145
  14,810
  15,511
  16,248
  17,025
  17,842
  18,701
  19,605
  20,556
  21,556
  22,607
  23,713
Retained Cash Flow (-), $m
  -861
  -12,602
  -4,277
  -4,406
  -4,539
  -4,679
  -4,824
  -4,975
  -5,133
  -5,298
  -5,470
  -5,208
  -5,396
  -5,592
  -5,798
  -6,013
  -6,237
  -6,473
  -6,720
  -6,978
  -7,249
  -7,532
  -7,830
  -8,141
  -8,468
  -8,811
  -9,170
  -9,547
  -9,942
  -10,357
  -10,792
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
 
  -5,665
  3,033
  3,178
  3,331
  3,493
  3,664
  3,847
  4,042
  4,249
  4,468
  4,702
  4,951
  5,215
  5,495
  5,792
  6,107
  6,441
  6,793
  7,167
  7,562
  7,978
  8,419
  8,883
  9,373
  9,890
  10,435
  11,009
  11,614
  12,250
  12,920
Discount rate, %
 
  13.40
  14.07
  14.77
  15.51
  16.29
  17.10
  17.96
  18.86
  19.80
  20.79
  21.83
  22.92
  24.06
  25.27
  26.53
  27.86
  29.25
  30.71
  32.25
  33.86
  35.55
  37.33
  39.20
  41.16
  43.22
  45.38
  47.65
  50.03
  52.53
  55.16
PV of cash for distribution, $m
 
  -4,995
  2,331
  2,102
  1,871
  1,642
  1,421
  1,211
  1,015
  836
  676
  536
  416
  316
  235
  170
  120
  82
  55
  35
  22
  13
  8
  4
  2
  1
  1
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  50.0
  33.4
  22.5
  15.4
  10.6
  7.4
  5.2
  3.7
  2.6
  1.9
  1.4
  1.0
  0.8
  0.6
  0.4
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

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 12.3
Price to Sales 1.1
Price to Book 1
Price to Tangible Book
Price to Cash Flow 11.5
Price to Free Cash Flow 11.5
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 $14257 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% 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 13.4%, 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 86.6%.

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 5.4% 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 1938.7%.

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 -1845.2%. 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 - $0 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 219 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 $14.1 billion.

RELATED COMPANIES Price Int.Val. Rating

COMPANY NEWS

▶ 5 Top-Ranked Insurance Stocks to Enhance Portfolio in 2H   [Jul-09-18 05:00PM  InvestorPlace]
▶ [$$] Lincoln National Is a Bargain   [12:01AM  Barrons.com]
▶ Top Undervalued Stocks To Buy   [May-31-18 10:02AM  Simply Wall St.]
▶ Lincoln National: 1Q Earnings Snapshot   [May-02-18 04:36PM  Associated Press]
▶ Lincoln Financial closes $3.3B acquisition of rival insurer   [07:41AM  American City Business Journals]
▶ [$$] 4 Cheap Stocks With Growth Potential   [Apr-21-18 12:01AM  Barrons.com]
▶ SEC proposes new standard of conduct rules for brokers   [Apr-18-18 05:31PM  MarketWatch]
▶ Micron Technology and Lincoln National skid; Nike rises   [Mar-23-18 04:27PM  Associated Press]
▶ Lincoln Financial Group to Report First Quarter Earnings   [Mar-22-18 11:00AM  Business Wire]
▶ Lincoln National beats 4Q profit forecasts   [Jan-31-18 04:57PM  Associated Press]
▶ Lincoln Financial Group to acquire Boston insurer for $3.3 billion   [02:06PM  American City Business Journals]
▶ 6 Companies Growing Revenue and Earnings   [Jan-17-18 03:42PM  GuruFocus.com]
▶ Stocks With Rising Relative Strength: Lincoln National   [03:00AM  Investor's Business Daily]
▶ Lincoln Financial, DowDuPont & SPDR Financial ETF (XLF)   [Jan-09-18 01:57PM  CNBC Videos]
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.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.