On Jul 4, Zacks Investment Research upgraded Lindsay Corporation LNN to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Even though Lindsay did not provide any guidance for fiscal 2015, the company remains optimistic about productivity improvement and geographic expansion and hopes to benefit from balance-sheet strength and acquisitions. Lindsay’s continuous focus on developing its cost structure, investing in product development and expanding global sales capabilities will also drive growth.
Moreover, the company continues to strengthen its irrigation product offerings through innovative technologies such as GPS positioning and guidance, variable rate irrigation, wireless irrigation management, and smartphone applications. It has also been pursuing acquisition of products and services that will allow the company to provide a more comprehensive solution.
Lindsay’s capital allocation plan remains in place with the company’s prioritization of cash use through investment in organic growth, including capital expenditures, primarily for increasing capacity and reducing costs. Capital expenditure is projected at $20 million to $25 million annually for the next 3 years. Lindsay intends to increase its dividend annually and to spend $100 million to $150 million for acquisitions over the next three years, using cash and debt. Acquisitions will likely help the company to attain its annual revenue growth goal of 10–15%.
Lindsay remains positive about the long-term drivers of water conservation including population growth, importance of biofuels and the need for safer as well as more efficient transportation solutions. The company is confident about the incremental profit potential of global expansion plans.
The Zacks Consensus Estimate for Lindsay has moved north over the last 30 days, rising 11% to $3.02 for fiscal 2015 and 7% to $3.30 for fiscal 2016.
Other Stocks That Warrant a Look
Other players in the same industry that warrant a look include Kubota Corporation KUBTY, Advanced Emissions Solutions, Inc. ADES and AGCO Corporation AGCO. While Kubota and Advanced Emissions sport the same rank as Lindsay, AGCO Corporation holds a Zacks Rank #2 (Buy).
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