Investing in small-cap stocks often involves higher risks, but occasionally, there are opportunities that stand out as particularly compelling. Lindsay Australia Ltd (ASX: LAU) is one such company currently trading close to its 52-week low of 82 cents, making it an intriguing option for those exploring investment possibilities.
Lindsay Australia, an ASX industrial stock, operates within the logistics and rural services sectors, focusing on the transportation and distribution of perishable goods. The company’s operations encompass road transport, logistics services, and rural supply chains, establishing it as a vital component of Australia's agricultural infrastructure.
Founded in 1953 by Tom and the late Peter Lindsay as Lindsay Brothers, the company was a pioneer in using refrigerated trailers in Australia. Over the decades, Lindsay Australia has expanded to include 19 branches, a fleet of over 1,000 vehicles, and 1,100 employees.
Recent Performance and Challenges
In FY23, Lindsay Australia delivered impressive results, with its underlying EBITDA increasing by 50.2% to $90.3 million. However, FY24 has presented challenges. The company recently adjusted its earnings outlook downward due to ongoing wet weather conditions. This has led to a revised underlying EBITDA guidance of between $88 million and $94 million, reflecting minimal growth compared to the previous year.
The company attributed this adjustment to significant rainfall impacting horticultural output and disruptions to rail operations earlier in the year.
Valuation and Dividend Yield
According to S&P Capital IQ, Lindsay Australia shares are currently valued at 7.5 times the estimated earnings for FY25. This valuation is appealing given the company's historical performance, with earnings per share (EPS) rising from around 3 cents in FY19 to 11 cents in FY23.
Additionally, Lindsay Australia offers a dividend yield of 6.4% based on its dividend payments over the past year. This high yield combined with the company's solid fundamentals may present an attractive opportunity for those looking to invest in a well-established company at a potentially advantageous price.
Lindsay Australia’s blend of competitive positioning in the logistics sector and appealing valuation metrics could make it a noteworthy candidate for further consideration.