Leading designer and manufacturer of self-propelled center pivot and lateral move irrigation systems, Lindsay Corporation LNN is expected to report third-quarter fiscal 2015 results on Jun 25.
In the last quarter, Lindsay had missed the Zacks Consensus Estimate by a wide margin, a negative surprise of 35.34%. The company has failed to match the Zacks Consensus Estimate in three of the last four quarters, resulting in a negative average surprise of 1.73% for the trailing four quarters.
Let’s see how things have shaped up for this announcement.
Factors to Consider This Quarter
Lindsay’s earnings continue to bear the brunt of weak U.S. demand which is being affected by lower commodity prices and a slump in farm incomes. The pricing environment in both the U.S. and international markets is expected to remain competitive in the near-term.
Lindsay’s backlog at the end of the prior quarter was $74.3 million, down from $89.3 million at the end of the year-ago quarter. The prior quarter includes $7.9 million of backlog from Elecsys Corporation. Year-over-year irrigation backlog levels, excluding Elecsys, have decreased, reflecting the change in conditions of the agricultural market. Infrastructure backlog has also decreased. Lindsay’s backlog represents some long-term irrigation and infrastructure projects as well as short lead time orders.
Lindsay remains concerned about the U.S. irrigation market in the rest of 2015, which will be affected by lower commodity prices, uncertainty surrounding renewal of tax incentives and lower farm incomes. Geopolitical uncertainty and lower global crop prices will also continue to weigh on international irrigation revenues. As a result, Lindsay estimates lower irrigation segment revenues in fiscal 2015. Further, Lindsay anticipates a reduction in export demand while ethanol production is likely to remain under pressure.
Earnings Whispers
Our proven model does not conclusively show that Lindsay will beat earnings 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) for this to happen. That is not the case here as you will see below.
Zacks ESP: The Most Accurate estimate and the Zacks Consensus Estimate currently stand at 76 cents, leading to an Earnings ESP of 0.00%.
Zacks Rank #4: Lindsay’s Zacks Rank #4 (Sell), when combined with a 0.00% Earnings ESP, makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some other companies that you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Deere & Company DE has an Earnings ESP of +1.42% and a Zacks Rank #3 (Hold).
MRC Global Inc. MRC has an Earnings ESP of 11.76% and a Zacks Rank #3.
Zebra Technologies Corporation ZBRA has an Earnings ESP of +2.56% and a Zacks Rank #3.
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