LNC
Lincoln National Corporation
$36.03
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 61.8% below fair value
You pay
$36.03
Bear
$65.99
Fair
$94.28
Bull
$122.55
Bear
$65.99
+83.1%
ROTCE 8.1% → 0.60x TBV
Fair
$94.28
+161.7%
ROTCE 10.8% → 0.99x TBV
Bull
$122.55
+240.1%
ROTCE 12.4% → 1.23x TBV
Key Value Driver
ROTCE (10.8%) vs. cost of equity (10.9%)
Implied Market Multiple
0.63x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $42.75 from 28 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $94.28 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Return on equity (10.8%) is below the minimum investors require (10.9%). This means the bank is worth less than the net assets on its books.
Dividend-based valuation: $17.80 (84% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $42.75 (from 28 analysts). Our estimate is 161% above the consensus -- consider that gap carefully.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly