Is Lindsay (LNN) Undervalued Amid Mixed Earnings and Strong International Growth Prospects?

The question of whether Lindsay Corporation (LNN) is undervalued hinges on a nuanced interplay between its recent earnings performance, valuation metrics, and the asymmetric potential of its international growth initiatives. While Q4 2025 results revealed a revenue shortfall in North America, the company's international operations and strategic investments in digital infrastructure have sparked debate about its current valuation. This analysis examines the dislocation between LNN's stock price and its long-term growth trajectory, while evaluating the risk-reward asymmetry for investors.

Earnings Performance: A Tale of Two Markets

Lindsay's Q4 2025 earnings report underscored divergent trends in its domestic and international markets. Revenue fell 6.3% year-on-year to $155.8 million, missing analyst estimates, driven by weak demand in North America due to low storm damage replacement activity and challenging market conditions. However, the company's GAAP EPS of $1.54 exceeded expectations by 4.4%, highlighting resilience in profitability. This divergence reflects a broader structural shift: while North America struggles with cyclical headwinds, international irrigation projects are emerging as a critical growth engine.

International revenue surged 23% year-on-year in Q4 2025, fueled by robust demand in South America, the Middle East and North Africa (MENA), and Australia. A $80 million irrigation project in the MENA region, secured in Q4, is expected to bolster future cash flows, albeit with delayed revenue recognition. Meanwhile, the infrastructure segment reported a 16% annual revenue increase in fiscal 2025, though Q4 saw a 16% decline due to the timing of Road Zipper project sales. These fluctuations highlight the importance of long-term project pipelines over short-term volatility.

Valuation Dislocation: A Historical and Industry Perspective

LNN's current valuation appears disconnected from its historical and industry benchmarks. As of January 6, 2026, the stock trades at a P/E ratio of 18.54, significantly below its 3-year (19.44), 5-year (25.09), and 10-year (51.54) averages according to historical data. This dislocation is even more pronounced when compared to industry peers. For instance, MAHINDRA EPC IRRIGATION carries a P/E of 27.88 as reported, while Global Water Resources (GWRS) trades at 41.96 according to financial data, reflecting higher growth expectations for niche players.

The EV/EBITDA metric further underscores undervaluation. LNN's adjusted EBITDA margin of 16.9% in Q4 2025 suggests strong operational efficiency, yet its EV/EBITDA multiple remains unreflective of its infrastructure and digital innovation initiatives. Analysts project 5.2% revenue growth over the next 12 months, with a consensus price target of $153.0, implying a 22% upside from its current price of $125.14 according to market data. This gap between intrinsic value and market price hints at a potential mispricing, particularly given the company's $150 million share repurchase program, which could further enhance earnings per share.

Asymmetric Risk-Reward Dynamics

The risk-reward profile for LNN is skewed toward upside potential. On the risk side, North American market conditions remain uncertain, with storm damage replacement cycles and macroeconomic pressures posing near-term challenges. Additionally, international projects, while promising, carry execution risks, including geopolitical and regulatory hurdles in emerging markets.

However, the reward asymmetry is compelling. LNN's international growth is underpinned by structural tailwinds, including water scarcity-driven demand in arid regions and infrastructure modernization in developing economies. The company's investments in digital technologies like FieldNET-a precision irrigation platform-are expected to drive margin expansion and customer retention. Furthermore, the $80 million MENA project and a $150 million share buyback program provide catalysts for near-term earnings visibility and capital return, respectively.

Analysts' $153.0 price target assumes a re-rating to align with industry multiples, which could occur if international revenue growth accelerates or North American demand stabilizes. Even in a downside scenario, the company's strong EBITDA margins and balance sheet flexibility (with $150 million in repurchase capacity) offer downside protection.

Conclusion: A Case for Strategic Entry

Lindsay's valuation dislocation presents an attractive entry point for investors who can differentiate between short-term earnings volatility and long-term growth potential. While North American headwinds and project execution risks are valid concerns, the company's international momentum, digital innovation, and capital return initiatives create a compelling asymmetric risk-reward profile. At current levels, LNN appears undervalued relative to both its historical performance and industry peers, making it a candidate for strategic accumulation ahead of its next earnings cycle.