Lindsay (LNN)

Agricultural and farm machinery company Lindsay (NYSE:LNN) reported Q3 CY2025 results beating Wall Street’s revenue expectations, but sales were flat year on year at $153.6 million. Its GAAP profit of $0.99 per share was 10% below analysts’ consensus estimates.

Company Overview

A pioneer in the field of center pivot and lateral move irrigation, Lindsay (NYSE:LNN) provides a variety of proprietary water management and road infrastructure products and services.

Agricultural machinery companies are investing to develop and produce more precise machinery, automated systems, and connected equipment that collects analyzable data to help farmers and other customers improve yields and increase efficiency. On the other hand, agriculture is seasonal and natural disasters or bad weather can impact the entire industry. Additionally, macroeconomic factors such as commodity prices or changes in interest rates–which dictate the willingness of these companies or their customers to invest–can impact demand for agricultural machinery.

Lindsay’s peers and competitors include Alamo (NYSE:ALG) and AGCO (NYSE:AGCO).

Examining a company’s long-term performance can provide clues about its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Lindsay grew its sales at a mediocre 7.3% compounded annual growth rate. This fell short of our benchmark for the industrials sector and is a poor baseline for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Lindsay’s recent performance shows its demand has slowed as its revenue was flat over the last two years. We also note many other Agricultural Machinery businesses have faced declining sales because of cyclical headwinds. While Lindsay’s growth wasn’t the best, it did do better than its peers.

This quarter, Lindsay’s $153.6 million of revenue was flat year on year but beat Wall Street’s estimates by 1.6%.

Looking ahead, sell-side analysts expect revenue to decline by 2.4% over the next 12 months, a slight deceleration versus the last two years. This projection is underwhelming and implies its products and services will see some demand headwinds.

Lindsay’s gross margin is slightly below the average industrials company, giving it less room to invest in areas such as research and development. As you can see below, it averaged a 29.3% gross margin over the last five years. Said differently, Lindsay had to pay a chunky $70.74 to its suppliers for every $100 in revenue.

In Q3, Lindsay produced a 29.1% gross profit margin, in line with the same quarter last year. On a wider time horizon, the company’s full-year margin has remained steady over the past four quarters, suggesting its input costs (such as raw materials and manufacturing expenses) have been stable and it isn’t under pressure to lower prices.

Lindsay has been an efficient company over the last five years. It was one of the more profitable businesses in the industrials sector, boasting an average operating margin of 12.6%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.

Looking at the trend in its profitability, Lindsay’s operating margin rose by 3.5 percentage points over the last five years, as its sales growth gave it operating leverage.

This quarter, Lindsay generated an operating margin profit margin of 7.4%, down 1.3 percentage points year on year. Since Lindsay’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Lindsay’s EPS grew at a remarkable 13.8% compounded annual growth rate over the last five years, higher than its 7.3% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into Lindsay’s quality of earnings can give us a better understanding of its performance. As we mentioned earlier, Lindsay’s operating margin declined this quarter but expanded by 3.5 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Lindsay, its two-year annual EPS growth of 1.8% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q3, Lindsay reported EPS of $0.99, down from $1.17 in the same quarter last year. This print missed analysts’ estimates, but we care more about long-term EPS growth than short-term movements. Over the next 12 months, Wall Street expects Lindsay’s full-year EPS of $6.78 to shrink by 7.3%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Lindsay has shown impressive cash profitability, enabling it to ride out cyclical downturns more easily while maintaining its investments in new and existing offerings. The company’s free cash flow margin averaged 8% over the last five years, better than the broader industrials sector.

Taking a step back, we can see that Lindsay’s margin expanded by 10.3 percentage points during that time. This is encouraging, and we can see it became a less capital-intensive business because its free cash flow profitability rose more than its operating profitability.

Lindsay’s free cash flow clocked in at $49.79 million in Q3, equivalent to a 32.4% margin. This result was good as its margin was 1.7 percentage points higher than in the same quarter last year, building on its favorable historical trend.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Although Lindsay hasn’t been the highest-quality company lately, it historically found a few growth initiatives that worked out well. Its five-year average ROIC was 16.4%, impressive for an industrials business.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. On average, Lindsay’s ROIC decreased by 2.2 percentage points annually over the last few years. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.

Companies with more cash than debt have lower bankruptcy risk.

Lindsay is a profitable, well-capitalized company with $250.6 million of cash and $132.4 million of debt on its balance sheet. This $118.2 million net cash position is 8.9% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

It was encouraging to see Lindsay beat analysts’ revenue expectations this quarter. On the other hand, its operating margin fell compared to last year and EPS missed by a fairly large amount. Overall, this quarter could have been better. The stock traded down 5.1% to $116.36 immediately following the results.

Updated: December 4, 2025 at 10:06 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Lindsay.

Lindsay isn’t a terrible business, but it isn’t one of our picks. First off, its revenue growth was mediocre over the last five years, and analysts expect its demand to deteriorate over the next 12 months. And while its rising cash profitability gives it more optionality, the downside is its projected EPS for the next year is lacking. On top of that, its organic revenue growth has disappointed.

Lindsay’s P/E ratio based on the next 12 months is 19.6x. This valuation is reasonable, but the company’s shakier fundamentals present too much downside risk. We're fairly confident there are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $127 on the company (compared to the current share price of $118.00).