What is LNC's Intrinsic value?

Lincoln National Corp (LNC) Intrinsic Value Analysis

Executive Summary

As of April 1, 2026, Lincoln National Corp's estimated intrinsic value ranges from $55.82 to $60.62 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Multi-Stage) $60.62 +70.8%
Dividend Discount Model (Stable) $55.82 +57.2%

Is Lincoln National Corp (LNC) undervalued or overvalued?

With the current market price at $35.50, the stock appears to be significantly undervalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Lincoln National Corp's intrinsic value, including:

  1. Dividend Discount Model (DDM): Values the company based on expected future dividend payments

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.11 1.3
Cost of equity 9.0% 12.1%
Cost of debt 5.0% 5.0%
Tax rate 17.6% 19.5%
Debt/Equity ratio 0.96 0.96
After-tax WACC 6.6% 8.2%

Valuation Methods

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 35.4%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 10.6%
  • Long-term growth rate: 1.0%
  • Fair value: $60.62 (70.8% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 12.1% (Low) to 9.0% (High)
  • Long-term growth rate: 0.5% (Low) to 1.5% (High)
  • Fair value range: $37 to $74
  • Selected fair value: $55.82 (57.2% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $6748M
Enterprise Value $3512M
Trailing P/E 5.74
Forward P/E 5.41
Trailing EV/EBITDA 0.00
Current Dividend Yield 640.27%
Dividend Growth Rate (5Y) 6.86%
Debt-to-Equity Ratio 0.96

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Dividend Discount Model (Multi-Stage) 57% $12.12
Dividend Discount Model (Stable) 43% $8.37
Weighted Average 100% $58.56

Investment Conclusion

Based on our comprehensive valuation analysis, Lincoln National Corp's intrinsic value is $58.56, which is approximately 65.0% above the current market price of $35.50.

Key investment considerations:

  • Historical dividend growth of 6.86%

Given these factors, we believe Lincoln National Corp is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.