Lindsay Earnings: An Early Look

Earnings season is just about over, with almost all companies already having reported their quarterly results. But there are still a few companies left to report, and Lindsay (NYSE: LNN  ) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Lindsay makes irrigation systems for agricultural use, and given last summer's drought, the company's products have moved into the limelight in a big way lately. Can the Omaha-based company take advantage of the opportunity it has to grow? Let's take an early look at what's been happening with Lindsay over the past quarter and what we're likely to see in its quarterly report on Wednesday.

Stats on Lindsay

Analyst EPS Estimate

$1.30

Change From Year-Ago EPS

30%

Revenue Estimate

$163.3 million

Change From Year-Ago Revenue

24%

Earnings Beats in Past 4 Quarters

3

Source: Yahoo! Finance.

Will Lindsay make its earnings grow this quarter?
Analysts have upgraded their estimates on Lindsay substantially in recent months, boosting their calls for the most-recent quarter by $0.18 per share and pushing up full-year fiscal 2013 earnings-per-share estimates by $0.67, or more than 15%. The company's stock has responded in kind, rising more than 20% since mid-December.

Lindsay's business may sound simple, but its equipment is both innovative and essential for farmers, especially in drier areas. With its quarter-mile-radius apparatus and pinpoint-precision water application methods, Lindsay is able to get 90% of available water into the soil, versus just 50% for flood irrigation and other more traditional methods.

During last year's drought, Lindsay came into its own. In its previous quarterly report, Lindsay said that overall sales of irrigation equipment jumped by a third, with a nearly 60% rise in domestic sales. Moreover, it projected that the trend would continue as more farmers seek to avoid the problems that last year's dry spell caused. Even with Valmont Industries (NYSE: VMI  ) also seeing similar gains in demand for irrigation equipment, it appears that there's more than enough demand for both companies to benefit, and Lindsay arguably has an advantage from its greater focus on irrigation equipment than Valmont and its more diversified business.

The big threat to Lindsay is one it shares with most ag-related companies: falling crop prices. Just last week, Deere (NYSE: DE  ) got downgraded by an analyst who argued that future drops in the price of corn would reduce demand for its agricultural equipment. Yet although calls for crop prices to drop will eventually be correct, they've largely been wrong for years now, and the industry has continued to flourish.

In its quarterly report, watch closely for Lindsay to discuss early sales of its equipment for the coming planting season. It's possible that Lindsay's sales boost in its previous quarter will hurt sales going forward if they represented a one-time jump in demand. But if revenue continues to grow, then Lindsay's recent share-price rise will look increasingly justified.

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