Why this ASX All Ords share is dumping 9% on earnings outlook
A man looking at his laptop and thinking.
Any concern about a more cautious tone from the Reserve Bank of Australia is being shrugged off by the S&P/ASX All Ordinaries Index (ASX: XAO) in afternoon trading. However, the odd ASX All Ords share is failing to catch the rising tide today.
One hapless company missing out on enthusiasm is Lindsay Australia Ltd (ASX: LAU). Shares in the transport and logistics operator are down 9% as investors respond to a fresh update from the company.
At the time of writing, Lindsay shares are swapping hands at 87 cents apiece. The steep fall means Lindsay shares are now at their lowest price in nearly 14 months, as shown in the chart above.
Wet weather weighs down guidance
Lindsay Australia achieved record results in what was dubbed a ‘transformative year’ for the company. In FY23, underlying EBITDA rose 50.2% to $90.3 million on the back of a $34.9 million uplift in EBITDA from its transport segment.
A little more recently, on 26 February, the company shared its first-half results for FY24. Within this report, the company said it was ‘on track’ to achieve around 13% underlying EBITDA growth from the prior financial year, pointing toward the lower end of a $102 million to $108 million range.
Today, the ASX All Ords share is getting scorched after sharing an update to its prior guidance.
As the update outlines, Lindsay Australia expects underlying EBITDA to land between $88 million and $94 million for the full financial year. At the midpoint, the revised guidance represents a 10.8% reduction from the lower bound of the prior estimate.
Why the change? There are a few factors that have sent Lindsay off track.
Firstly, ‘significant and persistent’ rainfall put a dent in horticultural output in the second half. Secondly, Lindsay Australia has faced numerous disruptions to its rail operations, the worst of which involved a four-week stoppage in March that extended into April.
Lastly, the company has suffered impacts on its ‘operational efficiency and utilisation’ from freight flow disruptions.
The team at Lindsay Australia anticipated an improvement in conditions. However, a rebound in volumes has failed to materialise post-Easter.
Is there a bright side for the ASX All Ords share?
There still might be a positive takeaway from today’s update.
The issues impacting earnings estimates were described as ‘short-term challenges’. That’s music to the ears of a long-term investor, if true.
Moreover, the longer-term view was painted as a positive one. For example, high soil moisture could help boost horticultural volumes moving forward. Migration and population growth were also earmarked as drivers for the refrigerated logistics segment.
While prone to recency bias, it’s worth remembering this little ASX All Ords share is up 143% over the last five years.
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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lindsay Australia. The Motley Fool Australia has recommended Lindsay Australia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.