Lindsay Corporation (LNN)

[whytestocks]

News: $LNN Lindsay Corporation Reports Fiscal 2019 Third Quarter Results

North America irrigation equipment demand remained constrained during the quarter Infrastructure revenue and results were lower in comparison to strong prior year performance Outlook for both irrigation and infrastructure showing signs of improvement Lindsay Corporation (NYSE...

Got this from Lindsay Corporation Reports Fiscal 2019 Third Quarter Results

[31set]

econ1: Lindsay closed at a price of $83.72 yesterday. I have a small position that I acquired over a year ago around $75.00. I am considering adding to the position, but perhaps not just yet. Here is how LNN stacks up against my criteria:

(1) Small Cap - LNN has a market capitalization of $1B.
(2) Low Debt - The company has no long term debt and a quick ratio of 2.6.
(3) Sustainable Products - Water is an increasingly precious resource. If you believe global warming theories, drought may become increasingly common creating growing demand for irrigation equipment. Road infrastructure should continue to be in demand. (Wish I'd invested at the beginning with whatever company first came out with all those endless orange cones in construction zones everywhere! They sure sold a few of those!)
(4) Little Government Influence - In some drought prone high population areas governments may take water rights away from agriculture. Still, there are growing numbers of people on the planet and no one is going to willingly quit eating. Food has to be grown somewhere.
(5) Low or Reasonable PE and PEG ratios - The PE at yesterday's closing price was 20.94. The yield adjusted PEG ratio for LNN is 0.99 based on the average of the 3, 4 & 5 year historical eps growth rates. The PE is somewhat higher than I like. The PEG ratio is OK.
(6) Decent & Growing Dividends - The dividend is 1.29% which I consider quite low. The company doubled the dividend in February 2014 and raised it another 3.8% in August 2014. Doubling is good!
(7) Positive Recent Information - Quite a spotty record here. The company's fortunes tend to follow the agricultural industry. Earnings have been substantially lower in the past year due to low crop prices. The company also sold an irrigation system in Iraq, which has only partially been installed due to the wars going on there. The company has not been able to complete the Iraq project, which could result in a charge-off at some point. The company expects slow sales in the irrigation division until crop prices improve. The infrastructure division is doing well. On 10-9-14 Lindsay reported better than expected earnings due to higher irrigation sales as a result of storm damage. This may only be a one time factor, but took the market by surprise.

NOTE: Others have a very negative view on Lindsay's stock. As of 10-15-14 over 42% of the stock's float was held short. Maybe they are all right and I'm wrong, but if really good news comes out there could be a truly explosive price rally. I don't see any catalyst at this time to get the price moving up. However, crop prices are now very low due to very favorable weather patterns and abundant harvests this year. I doubt crop prices will drop a whole lot farther, so the bad news should be mostly in the stock price already. Sooner or later a year will come along when weather conditions cause those prices to spike again. LNN is likely to soar with them. I am willing to wait. I might add to my position by early next year. I notice grain futures rallied starting in February this year, although the good weather ultimately caused them to collapse as summer went on. Perhaps a seasonal pattern?