Back to top

Analyst Blog

Zacks Equity Research

Will Reduced Farm Income Impact Lindsay's (LNN) Results?


Trades from $3

On Oct 6, we issued an updated research report on Lindsay Corporation (LNN - Analyst Report) . Reduced farm income remains the major drag on the company’s performance. Fluctuations in foreign currency exchange rates, pricing pressure and competition may also hurt Lindsay’s growth.

Notably, Lindsay’s earnings continue to bear the brunt of weak demand in the U.S. Lower commodity prices and reduced farm income have been affecting farmer sentiments regarding capital goods purchases. The USDA’s current projection for 2016 net farm income is $71.5 billion, down 11.5% from the prior year. Hence, Lindsay’s results will continue to be affected.

So far in the first three quarters of fiscal 2016, infrastructure segment revenues declined 25% from the comparable prior-year period. The most significant portion of the decline resulted from the completion of the Golden Gate Bridge project last year along with other larger projects. The company also remains exposed to currency exchange translation risks.

The U.K.’s decision to exit the EU has created economic uncertainty in the region. Brexit-related uncertainty will hurt Lindsay’s revenues in the near term. Further, Brazil remains a near-term challenge with slow FINAME funding for equipment purchases and significant government turmoil.

Moreover, competitive pricing environment and costs deleveraged on lower sales affected Lindsay’s margins. The pricing environment both in the U.S. and international markets is expected to remain competitive in the near term.

Lindsay currently has a Zacks Rank #4 (Sell).

Stocks to Consider

Some better-ranked stocks in the industrial products sector include Brady Corp. (BRC - Snapshot Report) , Berry Plastics Group, Inc. (BERY - Snapshot Report) and Deere & Company (DE - Analyst Report) .

Brady has an average positive earnings surprise of 31.49% over the last four quarters. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Berry Plastics, also a Zacks Rank #1 stock, delivered an average positive earnings surprise of 13.97% over the trailing four quarters.

Deere & Company, which sports a Zacks Rank #1, posted an average positive earnings surprise of 32.16% in the trailing four quarters.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>