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Lindsay (LNN) Up 8.7% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Lindsay (LNN - Free Report) . Shares have added about 8.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Lindsay due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Lindsay Q1 Earnings & Revenues Miss Estimates, Down Y/Y

Lindsay delivered adjusted net earnings per share of 49 cents in first-quarter fiscal 2021 (ended as of Nov 30, 2020), missing the Zacks Consensus Estimate of 76 cents. The bottom-line figure also plunged 36.4% year over year.

Including one-time items, net earnings for the reported quarter came in at 65 cents per share compared with the prior-year quarter’s 77 cents.

Lindsay generated revenues of $108.5 million compared with the $109.4 million reported in the year-ago quarter. The top-line figure also lagged the Zacks Consensus Estimate of $113 million.

The company’s backlog at the end of the reported quarter was $89.2 million compared with the $69.2 million witnessed at the end of the year-earlier quarter.

Operational Update

Cost of operating revenues went up 2.7% year on year to $77 million. Gross profit declined 8.8% to $31 million from the year-earlier quarter. Gross margin came in at 28.5% compared with the year-ago quarter’s 31%.

Operating expenses flared up 9% year over year to $24 million in the fiscal first quarter. The company recorded an operating income of $7.5 million, down 37.5% from the $12.3 million seen in the prior-year quarter. Operating margin came in at 7% in the reported quarter compared with the 11% recorded in the year-earlier period.

Segment Results

The Irrigation segment revenues increased 4.8% year over year to $87 million during the fiscal first quarter. North America irrigation revenues edged down 1.8% from the year-ago quarter to $53 million primarily due to lower engineering services revenues related to a project in 2020 that did not repeat in fiscal first quarter. This was, however, partly offset by higher irrigation equipment unit volume. International irrigation revenues climbed 16.2% year on year to $34.6 million on higher sales volumes in certain regions. These were partly negated by the unfavorable impact of foreign-currency translation. The segment’s operating income went up 9.2% year over year to $10.6 million.

The Infrastructure segment revenues declined 19.2% year over year to $21 million due to large order delivered in 2020 that did not repeat in fiscal first quarter as well as lower road construction activity. The segment reported an operating income of $4.3 million compared with the prior-year quarter’s $8.7 million.

Financial Position

Lindsay had cash and cash equivalents of $127 million at the end of the fiscal first quarter compared with the $121 million witnessed at the end of the prior-year quarter. The company’s long-term debt stood at $116 million at the end of the fiscal first quarter, flat year on year.

Outlook

The company anticipates solid revenue growth in the fiscal second quarter on solid order backlogs of its irrigation equipment in North America. Lindsay expects improved activity levels in the international irrigation markets. In fact, the irrigation market is gaining from the rising agricultural commodity prices and higher projected net farm income.

The company’s infrastructure business will continue to gain from Road Zipper systems sales. However, significant increases in steel and freight costs might dent the company’s margins until implementation of pricing actions.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 17.45% due to these changes.

VGM Scores

At this time, Lindsay has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Lindsay has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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