Lindsay To Report (LNN) Q1 Earnings: What's In The Offing?

Lindsay Corporation (NYSE:LNN) is scheduled to report first-quarter fiscal 2019 (ended Nov 30, 2018) results on Jan 8, before the opening bell.

In the last reported quarter, Lindsay’s adjusted earnings per share missed the Zacks Consensus Estimate. The company has missed the Zacks Consensus Estimate in two of the preceding four quarters, the average negative surprise being 11.96%.

Let’s see how things are shaping up prior to this announcement.

Key Factors to Consider

For the fiscal first quarter 2019, Lindsay anticipates its irrigation operating margin performance in the United States to benefit from the strength and growth of technology products. Further, the company commenced production on the San Rafael Bridge during third-quarter fiscal 2018 which is expected to generate revenues in the quarter to be reported.

Notably, the primary construction season for Northern Hemisphere countries generally corresponds with the company’s third and fourth fiscal quarters. Thus, seasonality remains a concern for the fiscal first-quarter results. Further, the North American agricultural market will likely remain plagued with lower commodity prices and farm income.

Lindsay’s results will bear the brunt of rising steel prices as a result of tariffs. Also, strengthening of the U.S. dollar escalates the cost in the local currency of the products exported from the United States into these countries and therefore, may affect Lindsay’s international sales and margins. In addition, the company will bear the brunt of elevated costs incurred in connection with its Foundation for Growth performance improvement initiative.

Nevertheless, the Zacks Consensus Estimate for earnings per share for the fiscal first quarter is pegged at 47 cents, reflecting year-over-year growth of around 57%. The Zacks Consensus Estimate for total sales of $113 million also indicates 3% decline from the prior-year quarter.

Our consensus estimates indicate that sales of the Infrastructure segment will reach $22.6 million in the fiscal first quarter, indicating 6% year-over-year growth. The estimate for the Irrigation Equipment segment’ssales for the quarter to be reported is $91 million, reflecting year-over-year decline of 12%.

Earnings Whispers

Our proven model does not conclusively show that Lindsay is likely to beat on earnings this quarter as it does not possess the key components. 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. This is not the case here as you will see below:

Earnings ESP: The Earnings ESP, which represents the difference between the Most Accurate Estimate of 36 cents and the Zacks Consensus Estimate of 47 cents, is -22.58%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Lindsay’s Zacks Rank #2 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

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

Share Price Performance

Lindsay’s shares have outperformed the industry’s performance in the past year. The stock has gained around 3%, as against the industry's loss of 10%.

Stocks Poised to Beat Earnings Estimates

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

Cintas Corporation (NASDAQ:CTAS) has an Earnings ESP of +0.50% and a Zacks Rank #2. Its shares have gained 2% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

W.W. Grainger, Inc. (NYSE:GWW) has an Earnings ESP of +0.31% and a Zacks Rank #3. The stock has gained 14% in a year’s time.

Heritage-Crystal Clean, Inc. (NASDAQ:HCCI) has an Earnings ESP of +1.12% and a Zacks Rank #2. The company’s shares have rallied 5% during the past year.

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