Over the last six months, Lindsay’s shares have sunk to $118.79, producing a disappointing 13.4% loss - a stark contrast to the S&P 500’s 14.1% gain. This was partly due to its softer quarterly results and might have investors contemplating their next move.
Is there a buying opportunity in Lindsay, or does it present a risk to your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free for active Edge members.
Why Is Lindsay Not Exciting?
Despite the more favorable entry price, we don't have much confidence in Lindsay. Here are three reasons there are better opportunities than LNN and a stock we'd rather own.
1. Slow Organic Growth Suggests Waning Demand In Core Business
Investors interested in Agricultural Machinery companies should track organic revenue in addition to reported revenue. This metric gives visibility into Lindsay’s core business because it excludes one-time events such as mergers, acquisitions, and divestitures along with foreign currency fluctuations - non-fundamental factors that can manipulate the income statement.
Over the last two years, Lindsay’s organic revenue averaged 1.6% year-on-year growth. This performance was underwhelming and suggests it may need to improve its products, pricing, or go-to-market strategy, which can add an extra layer of complexity to its operations. 
2. Projected Revenue Growth Shows Limited Upside
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect Lindsay’s revenue to stall, close to its 7.3% annualized growth for the past five years. This projection is underwhelming and suggests its newer products and services will not lead to better top-line performance yet.
3. Recent EPS Growth Below Our Standards
While long-term earnings trends give us the big picture, we also track EPS over a shorter period because it can provide insight into an emerging theme or development for the business.
Lindsay’s weak 1.7% annual EPS growth over the last two years aligns with its revenue trend. This tells us it maintained its per-share profitability as it expanded.
Final Judgment
Lindsay isn’t a terrible business, but it isn’t one of our picks. Following the recent decline, the stock trades at 19.5× forward P/E (or $118.79 per share). This valuation multiple is fair, but we don’t have much faith in the company. We're pretty confident there are superior stocks to buy right now. We’d suggest looking at one of Charlie Munger’s all-time favorite businesses.
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