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) is on track with its Foundation for Growth initiative that is expected to improve overall earnings. Focus on growth objectives, development of technology products, business simplification and capital-allocation plan also bode well. Further, the infrastructure business continues to fuel growth on the back of strong order activity for the Road Zipper projects and robust demand for transportation safety products.
Let’s focus on the factors that make this company an appropriate investment option at the moment.
Solid Q1 Results: 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.
Positive Earnings Growth Projections: The Zacks Consensus Estimate for earnings for fiscal 2020 is currently pegged at $2.67, indicating a jump of 84.1% from the prior year's reported figure. The consensus estimate for fiscal 2021 stands at $3.31, suggesting year-over-year growth of 23.7%.
Estimate Revision: The Zacks Consensus Estimate for fiscal 2020 and fiscal 2021 moved up 3% and 6%, respectively, over the past 90 days.
In the past six months, the company’s shares have gained 21.7%, outperforming the
's growth of 5.7%.
Growth Drivers in Place: Lindsay is poised to gain from its focus on margin expansion, growth objectives, and development of technology products, business simplification and capital-allocation plan. The company is focused on simplifying its business, in order to improve productivity. In sync with this, Lindsay’s Foundation for Growth initiative, launched in 2018, continues to progress, bringing in positive changes. A key financial objective of the initiative is to achieve operating margin performance between 11% and 12% by fiscal 2020. The company is fully focused on gaining margin expansion in four primary areas — manufacturing footprint, G&A, the shared services activities, sourcing and commercial.
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 and consequently gaining popularity globally. A multi-year lease in Germany was secured in first-quarter fiscal 2020. Furthermore, demand for the company’s transportation safety products continues to gain traction on the back of population growth and the need for improved road safety. It continues to focus on growing this business.
Lindsay’s capital-allocation plan is to continue investing in revenues and earnings growth, combined with a strategic process for enhancing returns to stockholders. Its balance-sheet strength will drive growth initiatives, both organic and through acquisitions, and other initiatives to improve returns for shareholders.
Other Stocks to Consider
Some other top-ranked stocks in the Industrial Products sector are DXP Enterprises, Inc.
, Cintas Corporation
and Graphic Packaging Holding Company
. While DXP Enterprises sports a Zacks Rank #1 (Strong Buy), Cintas and Graphic Packaging carry a Zacks Rank of 2 (Buy), at present.
DXP Enterprises has an estimated earnings growth rate of 10.5% for the ongoing year. In the past six months, the stock has appreciated 16%.
Cintas has an expected earnings growth rate of 15.6% for the current year. The stock has rallied 19% over the past six months.
Graphic Packaging has a projected earnings growth rate of 13.1% for 2020. The company’s shares have gained 18% over the past six months.
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