Given Lindsay Corp (LNN, Financial)'s daily gain of 22.56%, a 3-month gain of 4.42%, and an Earnings Per Share (EPS) of 6.43, we aim to answer the question: Is the stock modestly undervalued? This valuation analysis seeks to shed light on this question. We invite you to explore the following analysis to gain a comprehensive understanding of Lindsay Corp's intrinsic value and future prospects.
Company Introduction
Lindsay Corp is a renowned provider of proprietary water management and road infrastructure products and services. It operates in two major reporting segments: Irrigation and Infrastructure, with the former generating the majority of its revenue. Lindsay Corp's innovative technology solutions, such as GPS positioning and guidance, variable rate irrigation, wireless irrigation management, M2M communication technology, and smartphone applications, set it apart in the industry. The company's current stock price stands at $131.04, with a market cap of $1.40 billion. But how does this compare to its fair value?
Understanding the GF Value
The GF Value is a unique measure of a stock's intrinsic value, calculated based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. The GF Value Line gives an overview of the stock's ideal fair trading value. If the stock price is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. Conversely, if it is significantly below the GF Value Line, its future return will likely be higher.
According to the GuruFocus Value calculation, Lindsay (LNN, Financial) appears to be modestly undervalued. This suggests that the long-term return of its stock is likely to be higher than its business growth.
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Financial Strength
Companies with poor financial strength pose a high risk of permanent capital loss. To avoid this, it's essential to review a company's financial strength before purchasing shares. Lindsay's cash-to-debt ratio of 1.06 ranks better than 61.72% of 209 companies in the Farm & Heavy Construction Machinery industry, indicating strong financial strength.
Profitability and Growth
Investing in profitable companies, especially those with consistent profitability over the long term, is generally less risky. Lindsay's profitability and growth have been impressive, with a 3-year average revenue growth rate better than 83.82% of 204 companies in the Farm & Heavy Construction Machinery industry.
Another method of determining profitability is to compare a company's return on invested capital to the weighted average cost of capital. Lindsay's return on invested capital is 14.4, higher than its cost of capital of 9.7, implying the company is creating value for shareholders.
Conclusion
In summary, Lindsay (LNN, Financial)'s stock appears to be modestly undervalued. The company's strong financial condition, impressive profitability, and superior growth position it well for future success. To learn more about Lindsay stock, check out its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
