Lindsay Corporation (LNN), after beating the Zacks Consensus in four of the last five quarters, obtains the Zacks #1 Rank (Strong Buy). Higher estimates and a good looking chart also make the stock just what aggressive growth investors are looking for.
Company Description
Lindsay Corporation designs, manufactures, and sells irrigation systems that are primarily used in the agricultural industry to increase or stabilize crop production while conserving water, energy, and labor in the United States and internationally. Lindsay Corporation was founded in 1954 and is based in Omaha, Nebraska.
LNN Tops Expectations in Four of Last Five Quarters
LNN has beaten the Zacks Consensus Estimate in four of the last five quarters. Over the course of the last four reports, LNN has surprised Wall Street with a average surprise of $0.09 and has resulted in an average stock price increase of nearly 12%.
Along with beats of 27%, 25% and 30% the company has had one miss. The August 2011 quarter saw earnings come in $0.18 below the Zacks Consensus Estimate for a 28% miss. The stock moved lower by nearly 3% as a result.
LNN Recently Reported Earnings
On March 28, 2012 the company reported revenue of $132 million roughly $3 million more than the Zacks Consensus Estimate and higher than the $120 million reported in the year ago period. EPS of $1.00 was $0.17 ahead of the estimate or a 20% beat.
Earnings Estimates Bumped Up
Following the most recent earnings report, analysts bumped up their earnings estimates for 2012. The Zacks Consensus Estimate for 2012 EPS moved from $3.23 in February 2012 to the current level of $3.58.
The valuation for LNN is not watered down. At 20x trailing PE, the company trades well above the 12x industry average. Forward PE of 18.7x is also well above the industry average for 10x. Price to book and price to sales also carry a premium to the industry average.
The Chart
When we look at the price and consensus chart, we see how the stock closely followed the Zacks Consensus Estimate for 2011 earnings throughout most of 2010 and the first half of 2011. Then the chart breaks apart, as earnings estimates continue to increase and the stock lags behind. This is an indication of a stock that is undervalued and prime for a breakout. LNN is a Zacks #1 Rank (Strong Buy).
Brian Bolan is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor service
