This summary was created by AI, based on 5 opinions in the last 12 months.
Lamb Weston (LW) is currently facing significant challenges, having reported two consecutive disappointing quarters, with a staggering 30% drop in share price over the past week and 48% this year. The emergence of weight-loss drugs has adversely affected the demand for its core products, particularly french fries and fast-potato offerings. Analysts have noted a revenue miss of $1.61 billion against the expected $1.71 billion, coupled with an EPS miss of $0.78 compared to an anticipated $1.26. Although the company operates in a fundamentally stable industry with growth potential, the prevailing weak momentum and guidance for FY2025 growth between 3%-5% has led to a lack of confidence among experts. Despite these issues, some view the current valuation as an opportunity, given its relatively low forward PE of 12.5x and historical revenue and EPS growth, suggesting that recovery could be on the horizon if executed correctly.
LW reported misses on both top and bottom lines, revenue came at $1.61B compared to the consensus estimate of $1.71B, While EPS came at $0.78 missing the expectation of $1.26. Management also gave out weak guidance for FY2025 growth in the range of 3%-5%. The recent weakness management mentioned is largely due to restaurants raising menu prices, which can negatively affect consumer demand.
LW operates in a stable industry, but the recent earnings and guidance have been concerning, momentum in LW has also been poor, and it could take quite some time before LW starts to recover. We would not be in a rush here to add but wait until there is a clear sign of a recovery in place and better stock momentum
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LW produces and distributes frozen potato products globally and is now trading at 18.4x times' Forward P/E. In the last few years, LW’s revenue grew at a healthy double-digit rate. The balance sheet is leveraged, with a net debt of $3.3B, net debt/EBITDA is around 2.9x. The company has been reinvesting quite heavily to grow organically over the last few years. The debt adds risk, but considering the business it is probably at a manageable level. We would not like to see it increase, though. LW also pays consistently increasing dividends, which we like. Overall, a solid consumer staple name, debt is high, but the business is quite stable to support the leverage, ROE (113%!) is a bit inaccurate metric to use here, we prefer to use Return on total capital (26.7%) (debt + equity), we think that metrics reflect the return of the underlying business more accurately.
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Lamb Weston is a American stock, trading under the symbol LW-N on the New York Stock Exchange (LW). It is usually referred to as NYSE:LW or LW-N
In the last year, 2 stock analysts published opinions about LW-N. 2 analysts recommended to BUY the stock. 0 analysts recommended to SELL the stock. The latest stock analyst recommendation is . Read the latest stock experts' ratings for Lamb Weston.
Lamb Weston was recommended as a Top Pick by on . Read the latest stock experts ratings for Lamb Weston.
Earnings reports or recent company news can cause the stock price to drop. Read stock experts’ recommendations for help on deciding if you should buy, sell or hold the stock.
2 stock analysts on Stockchase covered Lamb Weston In the last year. It is a trending stock that is worth watching.
On 2025-04-02, Lamb Weston (LW-N) stock closed at a price of $54.15.
They just reported their second heinous quarter in a row. Shares fell 30% the past week and 48% this year. It used to be a top packaged food company. Trouble began a year ago with the new weight-loss drugs taking off, so it impacted LW's french fries and other fast-potato foods. Their April report was a disaster and now earnings are down 40% year over year. That said, this is an opportunity. It trades at 12.5x forward PE. The great potato gut will come to an end eventually.