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Lindsay (LNN) to Report Q2 Earnings: What's in the Offing?

Zacks Equity Research

Lindsay Corporation LNN is scheduled to report second-quarter 2019 results on Apr 9, before the opening bell.
In the last reported quarter, this leading designer and manufacturer of self-propelled center pivot and lateral move irrigation systems delivered year-over-year earnings improvement of 27%.  However, the company missed the Zacks Consensus Estimate of 47 cents.

In the trailing four quarters, Lindsay has lagged the Zacks Consensus Estimate in two quarters, meeting once and surpassing the remaining one. The company has average negative earnings surprise history of 12.58%.

Lindsay Corporation Price and EPS Surprise

Lindsay Corporation Price and EPS Surprise

Lindsay Corporation price-eps-surprise | Lindsay Corporation Quote

Let’s see how things are shaping up prior to this announcement.
Earnings Whispers?
Our proven model does not conclusively show that Lindsay is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks ESP: Lindsay has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate is pegged at 62 cents.
Zacks Rank: The company currently carries a Zacks Rank #3, which when combined with the company’s ESP of 0.00% makes surprise prediction difficult.
Conversely, we caution against the Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
Factors to Consider
The North American agricultural market continues to be under strain owing to lower commodity prices and farm income. Commodity prices remain under pressure on account of record soybean and near-record corn harvest. Further, it was affected by diminished export prospects owing to the ongoing trade dispute with China. Lindsay’s irrigation segment’s revenues continue to bear the brunt of weakness in the domestic agricultural markets. The Zacks Consensus Estimate for the irrigation segment’s revenues is at $96 million. It reflects a 14% drop from the $112 million reported in the prior-year quarter. The projection for the segment’s adjusted operating income is at $12.95 million.

However, Lindsay’s infrastructure business continues to generate growth on the back of strong order activity for the Road Zipper projects. Road Zipper 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. Further, demand for the company’s transportation safety products continues to gain traction on the back of population growth and need for improved road safety. The Zacks Consensus Estimate for the infrastructure segment’s revenues is currently pegged at $18.5 million, flat compared with the prior-year quarter. The segment is anticipated to report adjusted operating income of $2.98 million in the quarter.

The Zacks Consensus Estimate for total revenues for second-quarter 2019 is pegged at $114.5 million, projecting year-over-year decline of 12.2%.

Lindsay uses steel as a major raw material to manufacture products. Steel prices in the United States have increased throughout fiscal 2018, primarily as a result of tariffs that have been implemented on imported steel. Additionally, freight costs in the United States have increased owing to a general trucking shortage.

Nevertheless, the Zacks Consensus Estimate for earnings is pegged at 62 cents for the to-be-reported quarter, reflecting growth of 10.7% from 56 cents per share reported in the prior-year quarter. This will likely be aided by Lindsay’s efforts to improve productivity and performance in the infrastructure business, and lower tax rates.

Price Performance

Over the past year, Lindsay’s shares have appreciated 11%, outperforming the industry’s growth of 4%.
Stocks to Consider

Here are some stocks worth considering as these have the right combination of elements to post an earnings beat this quarter.
Sun Hydraulics Corporation SNHY has an Earnings ESP of +12.21% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Chart Industries, Inc. GTLS has an Earnings ESP of +8.87% and a Zacks Rank #3.  

Astec Industries Inc. ASTE has an Earnings ESP of +1.22% and a Zacks Rank #3.
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