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Lindsay (LNN) to Report Q3 Earnings: What's in the Cards?

Zacks Equity Research

Lindsay Corporation LNN is scheduled to report third-quarter fiscal 2019 results (ended May 31, 2019) on Jul 9, before the opening bell.

Last Quarter Performance

Lindsay delivered adjusted net earnings of 2 cents per share in the second quarter of fiscal 2019 (ended Feb 28, 2019) compared with the year-ago quarter’s figure of 56 cents. The bottom line significantly lagged the Zacks Consensus Estimate of 62 cents. Lower-than-expected sales volume in the North America irrigation segment due to the U.S.-China trade tensions and lower Road Zipper System sales affected the company’s performance.

The company has missed the Zacks Consensus Estimate in three of the preceding four quarters, the average negative surprise being a negative 36.77%.

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.

Key Factors to Consider

Lindsay’s backlog as of second-quarter fiscal 2019 end was at $44.4 million, down from $90.2 million as of Feb 28, 2018. This can be attributed to a decrease in Irrigation and Infrastructure backlogs. While $14.8 million of the backlog reduction resulted from business divestiture, lower backlog of Road Zipper System orders compared with the prior year also led to a $28.5-million reduction in backlog. This will impact revenues in the third quarter of fiscal 2019.

The Zacks Consensus Estimate for total sales of $137 million indicates decline of 19% from the prior-year quarter.

The North American agricultural market remains plagued with lower farm income and lesser commodity prices. Further, it was affected by reduced exports, as a result of the U.S.-China trade dispute during the quarter to be reported. Inclement weather has delayed the planting season in most productive farming regions in the United States. All these factors will impact Irrigation segment’s revenues in third-quarter fiscal 2019. The Zacks Consensus Estimate for the Irrigation Equipment segment’s operating income is $5.5 million, suggesting decline of 62% from the year-ago quarter. The Zacks Consensus estimate for the Irrigation Equipment segment’s sales is $109 million, indicating decline of 15% from the year-ago reported figure.

Recent lower order levels for the Road Zipper system will impact the Infrastructure segment’s revenues in the to-be-reported quarter. The Zacks Consensus Estimates for the Infrastructure segment’s revenues for the to-be-reported quarter is at $27.6 million, indicating decline of 33% from the year-ago quarter. The Zacks Consensus Estimates for the Infrastructure segment’s adjusted operating income for the May-end quarter is at $15.29 million, a projected drop of 15% from $18.07 million in the prior-year quarter.

Lindsay’s results will continue to bear the brunt of rising steel prices as a result of tariffs. Additionally, the company will bear the brunt of elevated costs incurred in connection to its Foundation for Growth performance improvement initiative.

The Zacks Consensus Estimate for earnings per share for the second quarter is pegged at 97 cents, suggesting decline of around 42% from the year-ago reported figure.

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) to be able to beat estimates. But that is not the case here, as you will see below.

Earnings ESP:  Lindsay’s Earnings ESP is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stand 97 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank:  Although Lindsay’s Zacks Rank #3 increases the predictive power of ESP, its 0.00% ESP makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 (Sell) or 5 (Strong Sell) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Share Price Performance

Lindsay’s shares have declined 17.1% in the past year against the industry’s growth of 15.8%.

Stocks Poised to Beat Earnings Estimates

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Roper Technologies Inc. ROP has an Earnings ESP of +0.82% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

NAPCO Security Technologies, Inc. NSSC has an Earnings ESP of +4.00% and a Zacks Rank #1.

Flowserve Corporation FLS has an Earnings ESP of +4.52% and a Zacks Rank #2.

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