Contrasting Unum Group (NYSE:UNM) & Lincoln National Corporation (LNC)

Unum Group (NYSE: UNM) and Lincoln National Corporation (NYSE:LNC) are both large-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, dividends, profitability, risk, earnings, analyst recommendations and institutional ownership.

Insider & Institutional Ownership

92.8% of Unum Group shares are owned by institutional investors. Comparatively, 80.8% of Lincoln National Corporation shares are owned by institutional investors. 0.5% of Unum Group shares are owned by insiders. Comparatively, 1.4% of Lincoln National Corporation shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Unum Group and Lincoln National Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Unum Group $11.19 billion 0.97 $1.66 billion $4.15 11.55
Lincoln National Corporation $13.86 billion 1.09 $2.17 billion $6.52 10.43

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

Profitability

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

Net Margins Return on Equity Return on Assets
Unum Group 8.57% 10.23% 1.49%
Lincoln National Corporation 10.85% 10.99% 0.64%

Dividends

Unum Group pays an annual dividend of $0.92 per share and has a dividend yield of 1.9%. Lincoln National Corporation pays an annual dividend of $1.16 per share and has a dividend yield of 1.7%. Unum Group pays out 22.2% of its earnings in the form of a dividend. Lincoln National Corporation pays out 17.8% 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. Unum Group has increased its dividend for 8 consecutive years and Lincoln National Corporation has increased its dividend for 6 consecutive years. Unum Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Unum Group and Lincoln National Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Unum Group 2 6 1 0 1.89
Lincoln National Corporation 0 5 4 0 2.44

Unum Group currently has a consensus target price of $45.63, indicating a potential downside of 4.81%. Lincoln National Corporation has a consensus target price of $73.11, indicating a potential upside of 7.48%. Given Lincoln National Corporation’s stronger consensus rating and higher probable upside, analysts clearly believe Lincoln National Corporation is more favorable than Unum Group.

Risk & Volatility

Unum Group has a beta of 1.56, suggesting that its stock price is 56% more volatile than the S&P 500. Comparatively, Lincoln National Corporation has a beta of 1.99, suggesting that its stock price is 99% more volatile than the S&P 500.

Summary

Lincoln National Corporation beats Unum Group on 12 of the 17 factors compared between the two stocks.

Unum Group Company Profile

Unum Group is a provider of financial protection benefits in the United States and the United Kingdom. The Company’s products include disability, life, accident, critical illness, dental and vision, and other related services. Its segments include Unum US, Unum UK, Colonial Life, Closed Block and Corporate. Its Unum US segment includes group long-term and short-term disability insurance, group life and accidental death and dismemberment products, and supplemental and voluntary lines of business. Its Unum UK segment includes insurance for group long-term disability, group life, and supplemental lines of business, which include dental, individual disability and critical illness products. Its Colonial Life segment includes insurance for accident, sickness, and disability products, life products, and cancer and critical illness products issued primarily by Colonial Life & Accident Insurance Company and marketed to employees. Its Closed Block segment consists of other insurance products.

Lincoln National Corporation Company Profile

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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