On Nov 27, we issued an updated research report on
Lindsay Corporation ( LNN Quick Quote LNN - Free Report) . The company’s Foundation for Growth initiative continues to progress and is driving the bottom line. Improving farm income in the United States and introduction of technologically advanced products will aid the irrigation segment. The infrastructure business is poised well for growth courtesy of strong demand for Road Zipper projects and transportation safety products. Foundation for Growth Initiative: A Game Changer
Lindsay’s Foundation for Growth initiative — a performance improvement initiative launched in 2018 — continues to progress and is bringing positive changes. The company is realizing performance improvements, revenue gains, cost savings and other benefits from this initiative. A key financial objective of the initiative was to achieve operating margin performance between 11% and 12% by fiscal 2020, which the company has realized as evident from operating margin of 11.4% in fiscal 2020. The Foundation for Growth initiative is expected to improve the company’s overall net earnings in the days ahead.
Infrastructure Business Poised to Grow
The company’s infrastructure business is poised to grow on the Highways England project. Also, momentum in Road Zipper Systems will contribute to the segment’s results. Lindsay’s Road Zipper System is a highly differentiated product that positively addresses key infrastructure needs such as reducing congestion, lowering carbon emission, and increasing driver safety. Thereby, it has been gaining popularity globally.
In September 2020, the Fixing America's Surface Transportation (FAST) Act has been extended for one year. The extension includes $13.6 billion to maintain the Highway Trust Fund's solvency at current funding levels ($47.1 billion for highway programs and $12.3 billion for transit programs) through fiscal year 2021. This extension will provide much-needed funding certainty to state and local governments navigating significant revenue shortfalls due to the COVID-19 pandemic. Improving Farm Dynamics Bodes Well
Per the U.S. Department of Agriculture's (USDA) latest available projections, net farm income is anticipated to increase 22.7% year over year to $102.7 billion in 2020. Also, global commodity prices have regained ground after declining significantly earlier in the year amid the pandemic. This turnaround was aided by an improving demand environment and lower yield expectations in the United States. Pickup in commodity prices and farm income will persuade farmers to resume spending on agricultural equipment, which in turn will drive Lindsay’s top line.
Technology to Provide Competitive Edge
Lindsay anticipates its irrigation operating margin performance in the United States to benefit from strength and growth of innovative technology products, and Foundation for Growth initiative. In April 2020, the company completed the buyout of Net Irrigate, LLC, which will expand the number of irrigated acres managed under the company’s FieldNET platform. This acquisition strengthens Lindsay’s market position in remote monitoring capabilities. Net Irrigate is an agriculture IoT technology company that provides remote monitoring solutions for irrigation customers.
Lindsay’s shares have gained 26.9% in the past year compared with the
industry’s rally of 53.3%. Zacks Rank
At present, Lindsay carries a Zacks Rank #2 (Buy). You can see
. the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here Other Stocks to Consider
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