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LNN is the one that gets me. Lindsay's pivots need water to move, and the farms that get hit hardest in a drought are the ones already drawing down the Ogallala, so who exactly is writing the check for a center pivot in a dry year. Irrigation equipment sells on farm capex and crop prices, not on a forecast. BG is a grain trader, they make money on volatility and logistics, not on dry weather as such. If anything a big El Niño historically means decent US corn and soy yields, which is not the trade you think you're making. AIs gave you LNN and Bunge because those two dominate the SEO around "El Niño stocks". That's not consensus, that's the same three articles being scraped.
Fair to worry about this one, but LNN is a rough way to play it. Irrigation demand doesn't spike in the drought year, it spikes the year after, when farmers finally have the cash and the reason to spend it. In a bad year capex gets defered and the order book goes quiet right when you'd expect it to explode. BG is a crush margin and trade flow story more than a weather story anyway, and South America tends to get rain in an El Niño year, which cuts against the drought thesis you're buying. The forecast has been public since spring so nobody is early on this.
Most of that trade has already run: Deere +49% this year, Bunge +33%. Bunge still screens cheap to me, about 10x forward earnings and fair value near $150 against $110 today, though free cash flow is negative right now. No view on LNN, it's below what I track in my research
Any thoughts on LNN?
It's not. Mid 20s p/e for a water related stock is kinda standard. LNN always seemed really cheap to me, but the stock hasn't really performed well, so I feel like there's a disconnect. FELE is another water name that interests me. Also a little expensive, but great company.
I came across them when I looked into LNN, who also makes irrigation equipment. Looks like a nice bottom on the chart. Not a bad pickup, just on charts and surface numbers!
LNN earnings out this morning. They make irrigation equipment for farms. Their revenue was down greatly as farmers delayed investment. From their earnings call: "While agricultural market fundamentals remain positive with U.S. net farm income projected to be above historical levels, general economic uncertainty has negatively impacted farmer sentiment, tempering order activity and driving some customers to delay capital investment decisions". They also have an infrastructure business, they make the zipper system for roads. From the call again: "In our infrastructure business, the anticipated increase in road construction and project activity supported by higher U.S. infrastructure spending has been slower to develop due to delays in project startups, caused in part by slower-than-expected releases of public funding". Seems that, at least this company, is seeing a delay in Investment until markets steady.
The growth in agricultural equipment sales is staggering. It makes me wonder why LNN is down so much with it's irrigation business.
LNN continues to fall. Interesting company that makes irrigation systems for agriculture. They're a smaller player in the field, but I do like the macro environment for their products. EV/EBITDA approaching 10 and ROIC in the mid teens are interesting.
LNN, should I lock in my loss (sell)?
LNN Q2 earnings out. Eps $1.63 vs $1.32 last year. Revenue $166 million vs $188 million estimate. They make farm irrigation equipment.
My irrigation pivot play seems to be working with LNN and VMI both green on the day. Unfortunately, it was cancelled out by the shitty performance of the railroads. CSX had a shit day and UNP wasn’t able to break out of its channel.
This might be a bit of a stretch, but with the rising commodities costs one area that hasn’t yet seen the benefit like DE are the manufacturers of center pivot irrigation systems. Farmers will be looking to increase yields and reinvesting in their operations so manufacturers like LNN and VMI will see some upside
There’s also LNN AQUA and XYL
I am an agriculture guy so doubt I would have otherwise! LNN is an interesting one too because they make irrigation and infrastructure equipment - has been a double-whammy with rising corn prices and all the infra talk.
Agreed - and not arguing tech is the way to go. Most thing even in the DOW are super overvalued as well. DE and LNN were two of my biggest plays since June and I wouldn't put another dime into them where they are at now.
Anyone invest in LNN - what a double whammy this year riding both corn prices and infrastructure.