Lindsay Corp (LNN - Analyst Report) has seen margins contract due to a significant decrease in the irrigation market. Previously, high commodity prices have been a windfall for farmers who in-turn used the higher profits from their corn, wheat, soy, to purchase new irrigation systems for their fields. But with commodity prices plummeting, and farm income decreasing, irrigation systems are being put aside for a later date. These forces have caused Lindsay Corp to become the Zacks Bear of the Day.

This Zacks Rank #5 (Strong Sell) stock manufactures and markets irrigation equipment including; lateral move and hose reel irrigation systems and GrowSmart controls, all of which are used by farmers to increase or stabilize crop production while conserving water, energy, and labor.  The company also manufactures and markets infrastructure products, crash cushions, and specialty barriers to improve motorists and highway worker safety.  

Estimates Graph

The table below shows the Price and EPS Consensus for Lindsay Corp.  As you can see EPS estimates have declined significantly, and are not showing any signs of rebounding anytime soon.  

Declining Estimates

Over the past 30 days, earnings estimates for Lindsay Corp have significantly declined for Q3 15, Q4 15, and FY 15; Q3 15 dropped from $1.17 to $0.76, Q4 15 decreased from $0.64 to $0.48, and FY 15 fell from $4.06 to $3.06.  These declining estimates indicate that it will be a difficult second half of their fiscal year for Lindsay Corp.

Bottom Line

With commodity prices negatively impacting farmer’s bottom lines, Lindsay Corp will see their margins contract due to lack of irrigation orders.  This will in-turn hurt both their top and bottom lines over the next two quarters.  If and when commodity prices rebound, then farmers will be looking to improve or replace their existing irrigation systems.

If you are inclined to invest in the Machine Farming Equipment sector, you will be best served to look into Deer & Co (DE), or Alamo Group (ALG), both currently carrying a Zacks Rank #3 (Hold).