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Lindsay to Gain on Strong Orders Amid Corn-Price Concerns

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On Jan 25, we issued an updated research report on Lindsay Corporation (LNN - Free Report) . The company’s performance will be backed by strong order backlog, latest technology aided products and growth in the U.S. irrigation business. However, its results might be marred by escalating commodity prices.

Strong Order Backlog to Boost Top Line

Lindsay’s order backlog at the end of first-quarter fiscal 2018 surged 44% to $80.3 million, reflecting increase in backlog in the Irrigation and Infrastructure segments. The company expects its backlog to grow, backed by the order for the Alex Fraser Bridge project worth around $14 million. Per the contract, Lindsay will install its Road Zipper System on the Alex Fraser Bridge.

New Products to Spur Growth

In the Infrastructure business, several products have been introduced to meet the MASH standards for road-safety hardware. The recent launch of the MAX-Tension End Terminal is in the queue. In the Irrigation business, the company rolled out FieldNET Advisor, which enables growers to maximize profitability through better irrigation management by helping them maximize yield output and crop performance, reduce input costs, and conserve water.

U.S. Irrigation Business Supports Lindsay

In fiscal 2018, Lindsay expects modest growth in the U.S. irrigation business as general economic optimism has contributed to improved sentiment toward investment, particularly in high yield-enhancing equipment. The company also anticipates growth in international markets as well as expansion of some project activity in developing markets.

Higher Commodity Prices to Mar Results

Lindsay’s irrigation revenues are highly dependent on the need for irrigated agricultural crop production, which, in turn, depend upon many factors, including commodity prices. As of November 2017, corn prices have flared up roughly 5%. Thus, further escalation in commodity prices will hinder margin performance.

Lindsay belongs to the Zacks Manufacturing Farm industry along with other players like Briggs & Stratton Corporation , Deere & Company (DE - Free Report) and AGCO Corporation (AGCO - Free Report) .

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