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Lindsay (LNN) Rewards Shareholders With a 3% Dividend Hike

Lindsay Corporation’s LNN board hiked its quarterly cash dividend by 3%. The move came after the company reported forecast-beating third-quarter fiscal 2022 results on June 30. Since then, LNN’s shares have increased 14%.

Lindsay will now pay the new quarterly cash dividend of 34 cents per share, up from the prior rate of 33 cents per share. The new quarterly dividend brings the company’s annualized dividend rate to $1.36 per share. The quarterly dividend will be paid out on Aug 31 to shareholders of record as the close of business on Aug 17, 2022. The raised dividend takes LNN’s annual dividend yield from 0.95% to 0.98%. The company has a current payout ratio of 23%. It has a five-year average dividend growth rate of 2.3%, higher than the industry’s 27.9%. The company hiked its dividend in third-quarter fiscal 2021 and maintained that rate in the last three quarters.

Over the five years, the company raised its dividend four times. Lindsay has a five-year average dividend yield of 1.28% and a five-year average payout ratio of 40.8%. The company fares well compared with its peer AGCO Corporation AGCO, which has a five-year average dividend yield of 0.83% and a five-year average payout ratio of 16%. AGCO increased its dividend four times in the past five years.

At the end of the fiscal third quarter, Lindsay had available liquidity of $146 million, with $95.7 million in cash, cash equivalents and marketable securities and $50 million available under the revolving credit facility. Lindsay's total debt was around $116 million, of which $115 million matures in 2030. LNN’s capital-allocation plan is to continue investing in organic growth and make synergistic acquisitions while enhancing returns to stockholders. Capital expenditures for fiscal 2022 are expected to be between $15 million and $20 million.

The company reported adjusted earnings per share of $2.28 in third-quarter fiscal 2022, beating the Zacks Consensus Estimate of $1.57. The bottom line improved 42% year over year. Revenues of $214 million increased 32% year over year and surpassing the Zacks Consensus Estimate of $186 million. Irrigation segment revenues rose 35% year over year to around $189 million, International irrigation revenues soared 75% to roughly $92 million and the Infrastructure segment revenues increased 17.5% to $26 million in the fiscal third quarter.

While global agriculture market fundamentals remain positive, the ongoing inflationary pressure is weighing on farmer sentiment in the United States. However, the company is witnessing increased activity levels in the international project markets as concerns over food security and global grain supplies have been heightened by the ongoing conflict between Russia and Ukraine.

The increase in road construction activity in the United States is expected to benefit the infrastructure business. Lindsay is likely to complete the delivery of the Road Zipper System project in Australia that began in the fiscal third quarter and expects to start the delivery of a significant barrier replacement project in Massachusetts in the fiscal fourth quarter.

Lindsay is witnessing higher year-over-year demand for its transportation safety products on government spending for road construction. The signing of the Infrastructure Investment and Jobs Act (IIJA) into law on Nov 15, 2021, will provide a positive tailwind for the infrastructure business. This legislation introduced $110 billion in incremental federal funding to repair roads, bridges and support other transformational projects, translating into higher demand for Lindsay’s transportation safety products.

Price Performance

Lindsay’s shares have fallen 15.2% in the past year compared with the industry’s decline of 14.5%.

Image Source: Zacks Investment Research

Zacks Rank & Stocks to Consider

Lindsay currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Industrial Products sector are Apogee Enterprises APOG and Titan International TWI, each flaunting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Apogee has an estimated earnings growth rate of 52% for fiscal 2023. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 23%.

Apogee pulled off a trailing four-quarter earnings surprise of 58.1%, on average. The company’s shares have gained 1.3% in the past year.

Titan International has an estimated earnings growth rate of 165% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 43%.

Titan International pulled off a trailing four-quarter earnings surprise of 56.4%, on average. The company’s shares have soared 79.5% in the past year.

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