Eagle, Idaho-based Lamb Weston Holdings, Inc. (LW) engages in the production, distribution, and marketing of frozen potato products. It offers frozen potatoes, commercial ingredients, and appetizers under the Lamb Weston brand, as well as under various customer labels. With a market cap of $9.6 billion, Lamb Weston’s operations span the United States, Canada, Mexico, and internationally. The packaged foods giant is expected to announce its Q1 earnings after the market closes on Tuesday, Oct. 1.
Ahead of the event, analysts expect Lamb Weston to report a profit of $0.73 per share, down 55.2% from $1.63 per share reported in the year-ago quarter.
The company has surpassed Wall Street’s EPS projections in two of the past four quarters while missing on two other occasions. Its EPS for the last reported quarter declined by 36.1% year-over-year to $0.78, missing the consensus estimates by 37.1%. The drop can primarily be attributed to a decline in topline and increased interest expenses.
Looking ahead to fiscal 2025, analysts expect Lamb Weston to report an EPS of $4.54, down 10.6% from $5.08 in fiscal 2024. However, in fiscal 2026, its EPS is projected to grow 13.2% year-over-year to $5.14.
LW stock has plummeted 38.2% in 2024, substantially underperforming the S&P 500 Index’s ($SPX) 20.3% gains and the Consumer Staples Select Sector SPDR Fund’s (XLP) 15.3% returns on a YTD basis.
Shares of Lamb Weston plunged 28.2% after the release of its fiscal 2024 earnings on Jul. 24. Despite a robust 20.9% year-over-year growth in full-year net sales to $6.5 billion, its net margin fell by 7.6% to 11.2%, leading to a substantial 28.1% decrease in net income to $725.5 million.
Moreover, its Q4 net sales fell to $1.6 billion, missing Wall Street’s topline expectations. This was primarily driven by an 8% drop in volumes, with more than half of this decrease attributed to market share losses and the strategic decision to exit certain lower-priced and lower-margin businesses in Europe earlier in the year. Additionally, approximately one-quarter of the volume decline was due to soft restaurant traffic trends in North America and other key international markets. At the same time, the remainder stemmed from voluntary product withdrawals.
The consensus opinion on LW stock is moderately bullish, with an overall “Moderate Buy” rating. Out of 10 analysts covering the stock, seven suggest a “Strong Buy,” and three recommend a “Hold” rating.
The average price target of $70.30 suggests a potential upside of 5.2% from current price levels.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
