Does Lincoln National’s 28% Rally Signal More Value Ahead in 2025?

• Wondering if Lincoln National stock is actually a good value in today's market? If you've been scanning for opportunities that haven't already run away, you’re in the right place.
• The stock has seen steady momentum, climbing 28.3% year-to-date and rising 22.1% over the past twelve months. This may signal that investors are reevaluating its long-term potential.
• Recent headlines about Lincoln National’s strategic decisions, such as updates to its insurance product lineup and leadership changes, have fueled discussion around its future prospects. Analysts and financial media have pointed out how these moves could impact growth, risk profile, and overall market sentiment.
• Right now, Lincoln National scores a 5 out of 6 on our valuation checks, suggesting there could be significant value versus peers. In the next sections, we will dig into how this score is calculated using different valuation methods, and why the best way to think about a fair price might be something even smarter than traditional models.

Lincoln National delivered 22.1% returns over the last year. See how this stacks up to the rest of the Insurance industry.

Approach 1: Lincoln National Excess Returns Analysis

The Excess Returns model evaluates Lincoln National’s ability to generate returns above its cost of equity. It focuses on profitability and growth derived from core operations, rather than just reported earnings or cash flows. This approach measures the company's sustained ability to deploy its capital efficiently and create lasting shareholder value.

For Lincoln National, analysts estimate a Book Value of $49.84 per share and a Stable EPS of $6.02 per share, based on a weighted average of future Return on Equity projections from six analysts. The company's Cost of Equity is $4.32 per share, giving it an Excess Return of $1.70 per share. The average Return on Equity stands at 10.95%. Over the long term, the Stable Book Value is expected to reach $55.03 per share, according to seven analysts.

Applying the Excess Returns Model, Lincoln National’s intrinsic value is significantly higher than its current trading price. This valuation indicates the stock is trading at a 55.7% discount to its implied fair value. This suggests a notable margin of safety for investors. Such a pronounced undervaluation could mean the market is not fully appreciating either the quality of the company’s capital allocation or its projected growth profile.

Result: UNDERVALUED

Our Excess Returns analysis suggests Lincoln National is undervalued by 55.7%. Track this in your watchlist or portfolio, or discover 860 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Lincoln National.

Approach 2: Lincoln National Price vs Earnings

The Price-to-Earnings (PE) ratio is often the preferred valuation metric for profitable companies, as it directly links share price to the company’s earnings. This ratio makes it easy to compare valuations across firms by showing how much investors are willing to pay for a dollar of current earnings.

A "normal" or fair PE ratio depends not just on profits, but also on expected earnings growth and the perceived risk. Companies with strong growth prospects or lower risk profiles usually trade at higher PE multiples, while slower-growing or riskier firms see lower ratios.

For Lincoln National, the current PE ratio is 3.84x, which stands out when compared to the insurance industry average of 13.09x and the peer group average of 12.85x. This steep discount suggests that the market is pricing the company far below the norm for its sector.

Simply Wall St's proprietary "Fair Ratio" offers even more precision by factoring in Lincoln National’s earnings growth outlook, industry position, profit margins, market capitalization, and risk. In this case, the Fair Ratio is calculated to be 9.90x. Unlike a plain industry or peer comparison, this figure gives a holistic and tailored view of what the multiple should actually be for Lincoln National, not just the average firm.

Comparing the current PE of 3.84x with the Fair Ratio of 9.90x reinforces the idea that the stock is undervalued on earnings. This significant gap suggests the market is either discounting future growth too heavily or is yet to recognize improvements in the business.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1403 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Lincoln National Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is simply your take on what a company’s future could look like, blending your personal assumptions for growth, margins, or risk with the business’s actual story. Narratives help you connect the dots from “what the company is doing” to “how much it should be worth,” by framing your outlook through your own fair value, expected revenue, and profitability estimates.

Narratives make investing more accessible because you do not need to be a valuation expert. You capture your view of Lincoln National, turn it into a forecast, and immediately see a fair value versus the market price, right on Simply Wall St’s Community platform (trusted by millions of investors). Since Narratives are dynamic, they update automatically whenever the company releases new results or news, meaning your investment case stays fresh and relevant.

For example, one investor might see Lincoln National’s product diversification and digital investments and predict accelerating revenue and margin growth leading to a fair value of $52 per share. Another investor might focus on legacy risks and slower improvements, setting their estimate at $37. Narratives let you compare these outlooks side-by-side and decide for yourself whether now is the right time to buy, sell, or hold.

In short, Narratives empower you to invest with confidence by making valuation personal, transparent, and responsive to what matters most to you.

Do you think there's more to the story for Lincoln National? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com