In August 2018, Lindsay Corporation (NYSE:LNN) released its latest earnings announcement, which showed that the company endured a immense headwind with earnings declining by -13%. Below is my commentary, albeit very simple and high-level, on how market analysts perceive Lindsay’s earnings growth trajectory over the next couple of years and whether the future looks brighter. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Analysts’ expectations for next year seems optimistic, with earnings rising by a significant 78%. Earnings are predicted to shoot up to around US$45m in the following year before plateauing, heading into 2021.
Even though it is useful to be aware of the growth rate each year relative to today’s figure, it may be more valuable to determine the rate at which the earnings are rising or falling on average every year. The pro of this method is that it ignores near term flucuations and accounts for the overarching direction of Lindsay’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I’ve inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 22%. This means that, we can presume Lindsay will grow its earnings by 22% every year for the next couple of years.
For Lindsay, I’ve put together three fundamental factors you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is LNN worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether LNN is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of LNN? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.