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Why Is Lindsay (LNN) Down 0.1% Since Last Earnings Report?
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It has been about a month since the last earnings report for Lindsay (LNN - Free Report) . Shares have lost about 0.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Lindsay due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Lindsay's Earnings Beat, Sales Miss Estimates in Q1
Lindsay delivered adjusted net earnings of 77 cents per share in the first quarter of fiscal 2020 (ended Nov 30, 2019), surpassing the Zacks Consensus Estimate of 65 cents. Further, the bottom-line figure soared 103% year over year. Lindsay’s Foundation for Growth initiative significantly drove margins in the irrigation segment. Revenue growth, margin improvement, and a favorable mix of higher margin revenues led to improved results in the infrastructure business.
Including the after-tax costs related to the company’s Foundation for Growth initiative, net earnings for the quarter were 77 cents compared with the net earnings of 11 cents recorded in the prior-year quarter.
Lindsay generated revenues of $109 million, down 2.3% year over year. The revenue figure also missed the Zacks Consensus Estimate of $112 million. This downside resulted from the business divestitures in the irrigation segment as part of the Foundation for Growth initiative.
Operational Update
Cost of operating revenues slipped 10% year over year to $75 million. Gross profit increased 19% to $34 million from the $29 million witnessed in the year-earlier quarter. Gross margin came in at 31.1% compared with the 25.6% recorded in the year-ago quarter.
Operating expenses declined 18% year over year to $21.8 million in the fiscal first quarter. The company reported an adjusted operating income of $12.3 million compared with the prior-year quarter’s $6 million. Adjusted operating margin came in at 11.2% compared with the 5.4% recorded in the comparable period last year.
Segment Results
The Irrigation segment revenues declined 6% year over year to $82.4 million in the fiscal first quarter. North America irrigation revenues were down 6.8% from the year-ago quarter, due to the divestiture of a company-owned dealership. Also, higher irrigation equipment unit volume was offset by the impact of lower average selling prices and bleak sales of replacement parts. International irrigation revenues decreased 4.5% year over year, mainly due to the negative impact of changes in foreign currency-translation rates.
The segment’s operating income rose 23.4% year over year to $9.8 million. Operating margin in the reported quarter was 11.8% compared with the prior-year quarter’s 9%. The Infrastructure segment revenues increased 11.1% year over year to $27 million, driven by higher year-over-year sales of road safety products and Road Zipper System lease revenues. The segment reported operating income of $8.8 million compared with the operating income of $4.3 million recorded in the prior-year period. The segment’s operating margin came in at 32.4% in the fiscal first quarter compared with the prior-year quarter’s 17.6%. This improvement can be attributed to a more favorable revenue mix, and improved cost and pricing performance compared with the prior year.
Financial Position
Lindsay had cash and cash equivalents of $120.9 million at the end of the fiscal first quarter compared with the $137.2 million recorded at the end of the year-earlier quarter. The company generated $1.5 million of cash in operating activities in the quarter compared with an outflow of $14 million in the prior-year quarter.
Lindsay had a long-term debt of $115.8 million as of Nov 30, 2019, compared with $116 million as of Nov 30, 2018. Lindsay’s backlog as of Nov 30, 2019 was $69.2 million compared with $49.2 million as of Nov 30, 2018.
Outlook
Per the company, the recent progress regarding the preliminary trade agreement between the United States and China bodes well for agricultural exports, in turn benefiting farmers The company expects to see overall growth in international irrigation, driven by improvement in Brazil and developing markets.
The infrastructure segment is anticipated to deliver an improved performance, backed by strong growth in Road Zipper. Additionally, it expects improvement in operating margin through the execution of projects, which are part of the Foundation for Growth initiative.
How Have Estimates Been Moving Since Then?
Fresh estimates followed an upward path over the past two months.
VGM Scores
Currently, Lindsay has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Lindsay has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Why Is Lindsay (LNN) Down 0.1% Since Last Earnings Report?
It has been about a month since the last earnings report for Lindsay (LNN - Free Report) . Shares have lost about 0.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Lindsay due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Lindsay's Earnings Beat, Sales Miss Estimates in Q1
Lindsay delivered adjusted net earnings of 77 cents per share in the first quarter of fiscal 2020 (ended Nov 30, 2019), surpassing the Zacks Consensus Estimate of 65 cents. Further, the bottom-line figure soared 103% year over year. Lindsay’s Foundation for Growth initiative significantly drove margins in the irrigation segment. Revenue growth, margin improvement, and a favorable mix of higher margin revenues led to improved results in the infrastructure business.
Including the after-tax costs related to the company’s Foundation for Growth initiative, net earnings for the quarter were 77 cents compared with the net earnings of 11 cents recorded in the prior-year quarter.
Lindsay generated revenues of $109 million, down 2.3% year over year. The revenue figure also missed the Zacks Consensus Estimate of $112 million. This downside resulted from the business divestitures in the irrigation segment as part of the Foundation for Growth initiative.
Operational Update
Cost of operating revenues slipped 10% year over year to $75 million. Gross profit increased 19% to $34 million from the $29 million witnessed in the year-earlier quarter. Gross margin came in at 31.1% compared with the 25.6% recorded in the year-ago quarter.
Operating expenses declined 18% year over year to $21.8 million in the fiscal first quarter. The company reported an adjusted operating income of $12.3 million compared with the prior-year quarter’s $6 million. Adjusted operating margin came in at 11.2% compared with the 5.4% recorded in the comparable period last year.
Segment Results
The Irrigation segment revenues declined 6% year over year to $82.4 million in the fiscal first quarter. North America irrigation revenues were down 6.8% from the year-ago quarter, due to the divestiture of a company-owned dealership. Also, higher irrigation equipment unit volume was offset by the impact of lower average selling prices and bleak sales of replacement parts. International irrigation revenues decreased 4.5% year over year, mainly due to the negative impact of changes in foreign currency-translation rates.
The segment’s operating income rose 23.4% year over year to $9.8 million. Operating margin in the reported quarter was 11.8% compared with the prior-year quarter’s 9%.
The Infrastructure segment revenues increased 11.1% year over year to $27 million, driven by higher year-over-year sales of road safety products and Road Zipper System lease revenues. The segment reported operating income of $8.8 million compared with the operating income of $4.3 million recorded in the prior-year period. The segment’s operating margin came in at 32.4% in the fiscal first quarter compared with the prior-year quarter’s 17.6%. This improvement can be attributed to a more favorable revenue mix, and improved cost and pricing performance compared with the prior year.
Financial Position
Lindsay had cash and cash equivalents of $120.9 million at the end of the fiscal first quarter compared with the $137.2 million recorded at the end of the year-earlier quarter. The company generated $1.5 million of cash in operating activities in the quarter compared with an outflow of $14 million in the prior-year quarter.
Lindsay had a long-term debt of $115.8 million as of Nov 30, 2019, compared with $116 million as of Nov 30, 2018. Lindsay’s backlog as of Nov 30, 2019 was $69.2 million compared with $49.2 million as of Nov 30, 2018.
Outlook
Per the company, the recent progress regarding the preliminary trade agreement between the United States and China bodes well for agricultural exports, in turn benefiting farmers The company expects to see overall growth in international irrigation, driven by improvement in Brazil and developing markets.
The infrastructure segment is anticipated to deliver an improved performance, backed by strong growth in Road Zipper. Additionally, it expects improvement in operating margin through the execution of projects, which are part of the Foundation for Growth initiative.
How Have Estimates Been Moving Since Then?
Fresh estimates followed an upward path over the past two months.
VGM Scores
Currently, Lindsay has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Lindsay has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.