Lindsay (LNN) Downgraded To Sell On Near-Term Headwinds

On Dec 13, Lindsay Corporation (NYSE:LNN) was downgraded to a Zacks Rank #4 (Sell).

The downgrade underlines negative estimate revisions following the disappointing fourth-quarter fiscal 2017 results and rising near-term headwinds.

Notably, Lindsay’s share price movement has not been much impressive since it reported the fiscal fourth-quarter results. The company’s shares have underperformed the S&P 500 index over the past two months. While the index has gained 4.6%, the stock has recorded 2% growth. It has also underperformed the industry’s growth of 14.5% during the same time frame.

Key Factors

Lindsay’s bottom line in the fiscal fourth quarter was adversely impacted by a higher effective income tax. Both top and bottom lines missed the Zacks Consensus Estimate. Lower infrastructure spending, challenging political and economic conditions, and currency headwinds are expected to thwart the company’s performance in the near term as well.

Notably, Lindsay’s Road Zipper System projects will be impacted by insignificant increase in spending for surface transportation projects under the current Federal Highway Bill, the FAST (Fixing America's Surface Transportation) Act.

Moreover, in the international markets, regional political and economic factors, currency conditions and local competition have given rise to a challenging environment for Lindsay. Additionally, the company’s international results are heavily dependent upon project sales which tend to fluctuate and can be difficult to forecast accurately.

Further, its estimates have recorded a downtrend over the past 60 days. For fiscal 2017, estimates moved down roughly 1.3% to $2.94. The Zacks Consensus Estimate for fiscal 2018 also declined 4.6% over the same time period to $3.55.

Stocks to Consider

Some better-ranked players in the industry are Deere & Co. (NYSE:DE) , Kubota Corp. (OTC:KUBTY) and ACCO Brands Corp. (NYSE:ACCO) . While Deere sports a Zacks Rank of 1 (Strong Buy), Kubota Corporation and ACCO Brands carry a Zacks Rank 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Deere has a long-term earnings growth rate of 8.2%. Its shares have rallied 46.6%, year to date.

Kubota Corporation has a long-term earnings growth rate of 10.7%. So far this year, shares of the company have gained 30.6%.

ACCO Brands has a long-term earnings growth rate of 10%. The stock has rallied 46.9% in the year so far.

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