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Analysts Are Updating Their Lamb Weston Holdings, Inc. (NYSE:LW) Estimates After Its Second-Quarter Results

Simply Wall St
·4 min read

Lamb Weston Holdings, Inc. (NYSE:LW) shareholders are probably feeling a little disappointed, since its shares fell 2.4% to US$76.83 in the week after its latest quarterly results. Lamb Weston Holdings reported US$896m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$0.66 beat expectations, being 4.8% higher than what the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Lamb Weston Holdings

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Taking into account the latest results, Lamb Weston Holdings' six analysts currently expect revenues in 2021 to be US$3.53b, approximately in line with the last 12 months. Per-share earnings are expected to rise 3.7% to US$2.41. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$3.54b and earnings per share (EPS) of US$2.38 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

There were no changes to revenue or earnings estimates or the price target of US$79.88, suggesting that the company has met expectations in its recent result. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Lamb Weston Holdings, with the most bullish analyst valuing it at US$89.00 and the most bearish at US$59.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that sales are expected to reverse, with the forecast 0.5% revenue decline a notable change from historical growth of 5.8% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 3.0% next year. It's pretty clear that Lamb Weston Holdings' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Lamb Weston Holdings. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Lamb Weston Holdings analysts - going out to 2023, and you can see them free on our platform here.

Plus, you should also learn about the 3 warning signs we've spotted with Lamb Weston Holdings (including 1 which is potentially serious) .

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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