On Oct 6, we issued an updated research report on Lindsay Corporation LNN . Reduced farm income remains the major drag on the company’s performance. Fluctuations in foreign currency exchange rates, pricing pressure and competition may also hurt Lindsay’s growth.
Notably, Lindsay’s earnings continue to bear the brunt of weak demand in the U.S. Lower commodity prices and reduced farm income have been affecting farmer sentiments regarding capital goods purchases. The USDA’s current projection for 2016 net farm income is $ 71.5 billion, down 11.5% from the prior year. Hence, Lindsay’s results will continue to be affected.
So far in the first three quarters of fiscal 2016, infrastructure segment revenues declined 25% from the comparable prior-year period. The most significant portion of the decline resulted from the completion of the Golden Gate Bridge project last year along with other larger projects. The company also remains exposed to currency exchange translation risks.
The U.K.’s decision to exit the EU has created economic uncertainty in the region. Brexit-related uncertainty will hurt Lindsay’s revenues in the near term. Further, Brazil remains a near-term challenge with slow FINAME funding for equipment purchases and significant government turmoil.
Moreover, competitive pricing environment and costs deleveraged on lower sales affected Lindsay’s margins. The pricing environment both in the U.S. and international markets is expected to remain competitive in the near term.
Lindsay currently has a Zacks Rank #4 (Sell).
Stocks to Consider
Some better-ranked stocks in the industrial products sector include Brady Corp. BRC , Berry Plastics Group, Inc. BERY and Deere & Company DE .
Brady has an average positive earnings surprise of 31.49% over the last four quarters. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here .
Berry Plastics, also a Zacks Rank #1 stock, delivered an average positive earnings surprise of 13.97% over the trailing four quarters.
Deere & Company, which sports a Zacks Rank #1, posted an average positive earnings surprise of 32.16% in the trailing four quarters.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Plantations International