Lindsay Stock Falls as Weak Guidance Offsets EPS Beat
A Q1 revenue miss and cautious outlook on North American farm demand overshadowed a new $80 million overseas contract and an increased share buyback plan.
Shares of Lindsay Corporation (NYSE: LNN) fell nearly 5% in Thursday trading after the company reported first-quarter earnings that revealed a concerning miss on revenue and a cautious outlook for its core North American market. The negative forecast overshadowed an earnings-per-share beat and significant new international business, signaling that investors are prioritizing near-term demand challenges.
The Omaha-based manufacturer of irrigation and infrastructure equipment saw its stock price drop approximately 4.6% to $118.54. The sell-off came after the company posted quarterly revenue of $155.8 million, a 6.6% miss against analyst estimates of $166.8 million and a 6% decline from the prior year. This topline weakness soured the market's view, despite diluted earnings of $1.54 per share, which edged past the consensus estimate of $1.47.
The primary driver of the revenue shortfall was softness in the irrigation segment, particularly in North America. Management cited weaker demand as lower commodity prices and higher input costs have impacted farmer sentiment and capital spending on agricultural equipment. The Irrigation segment's operating margin improved, a result the company credits to disciplined pricing and cost management, but it wasn't enough to offset the lower sales volume.
"Softer demand in the North American irrigation market and credit availability constraints in Brazil continue to present challenges," the company noted in its quarterly earnings release. Management also warned of a difficult year-over-year revenue comparison for its infrastructure business in the upcoming second quarter.
However, the report contained several significant bright spots. The infrastructure segment was a point of strength in the first quarter, with revenues growing 17% year-over-year, driven by strong sales of road safety products. Furthermore, Lindsay announced it had secured a major $80 million irrigation project in the Middle East and North Africa (MENA) region, with around $70 million of that revenue expected to be realized in fiscal 2026. This key international win provides a substantial boost to the company's backlog.
In a move signaling confidence in its long-term value, Lindsay's board authorized a new $150 million share repurchase program. This follows the $30 million worth of shares the company bought back during the first quarter under a previous authorization.
Despite these positive developments, the market's immediate reaction focused on the headwinds in the company's largest market. For now, investors appear to be weighing the slowdown in U.S. farm spending more heavily than the promise of future international growth and shareholder-friendly capital returns. While analysts hold an average price target of around $131, Lindsay Corporation must first navigate the current downturn in domestic agricultural demand.