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Here's Why Lindsay (LNN) Stock is an Attractive Bet Now

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Lindsay Corporation (LNN - Free Report) is poised well on its Foundation for Growth initiative, momentum in the infrastructure business, acquisitions and development of innovative technology products. Improving farm dynamics in the United States on the back of improving farm income and commodity prices also bodes well.

Lindsay currently carries a Zacks Rank #2 (Buy). It has a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities for investors.

You can see the complete list of today's Zacks #1 Rank stocks here.

Let’s delve into the factors that make the stock an alluring investment option at the moment.

Price Performance: Lindsay’s shares have gained 24.3% over the past three months, compared with the industry’s growth of 18.7%.

Solid Q4 Earnings: Lindsay reported adjusted net earnings per share of $1.35 in fourth-quarter fiscal 2020 (ended Aug 31, 2020) that soared 150% from the prior-year quarter. Revenues improved 26% year over year to $128 million. Both the top and bottom lines beat the respective Zacks Consensus Estimate.

Positive Earnings Surprise History: Lindsay has an impressive earnings surprise history. It beat estimates earnings in each of the trailing four quarters, the average surprise being 16.8%.

Upward Estimate Revisions: The Zacks Consensus Estimate for earnings for fiscal 2021 has moved up 12% over the past 90 days. The estimate for fiscal 2022 has moved north by 14%.

Superior Return on Assets: Lindsay currently has a Return on Assets (ROA) of 7.1%, higher than the industry’s 3.6%. An above-average ROA denotes that the company is generating earnings by effectively managing its assets.

Growth Drivers in Place

Lindsay launched its Foundation for Growth initiative in 2018 to improve the company’s performance. The initiative has led to performance improvements, revenue gains, cost savings and other benefits. It is anticipated to improve the company’s overall net earnings in the months ahead.

The company’s infrastructure business is poised to grow on ongoing strong demand for Road Zipper Systems. The 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. This, in turn, has been helping it in gaining popularity worldwide. Further, demand for the company’s transportation safety products continues to gain traction courtesy of population growth and the need for improved road safety.

Per the U.S. Department of Agriculture's (USDA) latest available projections, net farm income is anticipated to increase 22.7% to $102.7 billion in 2020. In inflation-adjusted terms, the projected net farm income in 2020, if realized, would be 13.8% higher than 2000-19 average ($90.2 billion). After declining significantly earlier in the year amid the pandemic, global commodity prices have regained ground aided by an improving demand environment. This will persuade farmers to resume spending on agricultural equipment, which in turn will drive Lindsay’s top line. Moreover, continued focus on bringing innovative technology products in the product will boost its irrigation margin performance.

Stocks to Consider

Some other top-ranked stocks in the Industrial Products sector include AGCO Corporation (AGCO - Free Report) , Avery Dennison Corporation (AVY - Free Report) and Ball Corporation (BLL - Free Report) . While AGCO flaunts a Zacks Rank #1, Avery Dennison and Ball Corporation carry a Zacks Rank #2, at present.

AGCO has an estimated earnings growth rate of 15.4% for the ongoing year. Shares of the company have appreciated 19% in the past three months.

Avery Dennison has a projected earnings growth rate of 4.6% for the current year. Over the past three months, the company’s shares have gained 23%.

Ball Corporation has an expected earnings growth rate of 16.1% for 2020. The stock has rallied 11% over the past three months.

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