Contrasting Torchmark (TMK) & Lincoln National (LNC)

Torchmark (NYSE: TMK) and Lincoln National (NYSE:LNC) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, risk, earnings, profitability, institutional ownership, valuation and analyst recommendations.

Analyst Recommendations

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This is a summary of current recommendations and price targets for Torchmark and Lincoln National, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Torchmark 3 3 1 0 1.71
Lincoln National 1 4 6 0 2.45

Torchmark currently has a consensus price target of $82.14, indicating a potential downside of 1.01%. Lincoln National has a consensus price target of $83.90, indicating a potential upside of 21.31%. Given Lincoln National’s stronger consensus rating and higher probable upside, analysts plainly believe Lincoln National is more favorable than Torchmark.

Profitability

This table compares Torchmark and Lincoln National’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Torchmark 34.99% 10.81% 2.52%
Lincoln National 14.48% 10.86% 0.64%

Insider & Institutional Ownership

74.8% of Torchmark shares are held by institutional investors. Comparatively, 82.3% of Lincoln National shares are held by institutional investors. 3.7% of Torchmark shares are held by company insiders. Comparatively, 1.1% of Lincoln National shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Dividends

Torchmark pays an annual dividend of $0.64 per share and has a dividend yield of 0.8%. Lincoln National pays an annual dividend of $1.32 per share and has a dividend yield of 1.9%. Torchmark pays out 13.3% of its earnings in the form of a dividend. Lincoln National pays out 16.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Torchmark has increased its dividend for 8 consecutive years and Lincoln National has increased its dividend for 7 consecutive years.

Earnings and Valuation

This table compares Torchmark and Lincoln National’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Torchmark $4.16 billion 2.28 $1.45 billion $4.82 17.22
Lincoln National $14.59 billion 1.03 $2.08 billion $7.79 8.88

Lincoln National has higher revenue and earnings than Torchmark. Lincoln National is trading at a lower price-to-earnings ratio than Torchmark, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Torchmark has a beta of 0.95, suggesting that its stock price is 5% less volatile than the S&P 500. Comparatively, Lincoln National has a beta of 1.94, suggesting that its stock price is 94% more volatile than the S&P 500.

Summary

Lincoln National beats Torchmark on 10 of the 17 factors compared between the two stocks.

About Torchmark

Torchmark Corporation (Torchmark) is an insurance holding company. The Company, through its subsidiaries, provides a range of life and health insurance products and annuities to a base of customers. The Company’s segments include life insurance, health insurance, annuities and investment. The life insurance segment includes traditional and interest-sensitive whole life insurance as well as term life insurance. The Health insurance products are guaranteed-renewable and include Medicare Supplement, critical illness, accident and limited-benefit supplemental hospital and surgical coverage’s. Annuities include fixed-benefit contracts. The Company markets its insurance products through various distribution channels, each of which sells the products of its insurance segments. Its subsidiaries include American Income Life Insurance Company (American Income) and Liberty National Life Insurance Company (Liberty National).

About Lincoln National

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.

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