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Lamb Weston (LW) to Report Q2 Earnings: What's in the Offing?

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Zacks Equity Research
·4 min read
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Lamb Weston Holdings, Inc. LW is likely to register top and bottom-line declines when it reports second-quarter fiscal 2021 numbers on Jan 7. The Zacks Consensus Estimate for revenues is pegged at $878 million, which suggests a decline of13.9% fromthe figure reported in the prior-year quarter.

The Zacks Consensus Estimate for the bottom line is unchanged inthe past 30 days at 62 cents per share, suggesting a decline of 34.7% from the year-ago quarter’sfigure. Moreover, Lamb Weston has a trailing four-quarter negative earnings surprise of 2.4%, on average.

Lamb Weston Holdings Inc. Price, Consensus and EPS Surprise



Lamb Weston Holdings Inc. Price, Consensus and EPS Surprise
Lamb Weston Holdings Inc. Price, Consensus and EPS Surprise

Lamb Weston Holdings Inc. price-consensus-eps-surprise-chart | Lamb Weston Holdings Inc. Quote

 

Key Factors to Note

Lamb Weston is bearing the brunt of the pandemic, which is impacting traffic at restaurants and other foodservice channels. This has been denting demand in the away-from-home lines. Such challenges were reflected in the company’s first-quarter fiscal 2021 results, wherein Foodservice unit volumes were marred by lower demand stemming from pandemic-led traffic declines at restaurants as well as non-commercial customers like lodging and hospitality, schools, sports and entertainment, and workplace environments, among others. Though trends in the first quarter improved sequentially with pandemic-led restrictions being lifted, demand continues to bebelow pre-pandemic levels due to social distancing trends. These factors are likely to have affected the company’s performance in the quarter to be reported.

Meanwhile, Lamb Weston’s Retail segment has been benefiting from increased demand owing to the pandemic-led higher at-home consumption. In the last earnings call, the company provided an update on the shipping trends for the first four weeks of the second quarter of fiscal 2020, until the week ended Sep 25. In this regard, the company’s shipments in North America were nearly 90% of the prior-year levels, driven by demand from quick-serve restaurants and retail along with continued recovery at full-service restaurants. Apart from this, robust price/mix has been boostingLamb Weston’s top line.

However, the company is seeing escalated costs associated with COVID-19, such as inefficiencies and production costs related to factory utilization as well ascosts associated with producing retail products on channels mainly created for foodservice products, among others. The company anticipates incremental pandemic-led costs to persist at its manufacturing, commercial, functional support and supply-chain operations. These include costs related to ensuring sanitization as well as health and safety, increased transportation, warehousing expenses along with retention of functional support workers, among others. However, it has been taking strong measures to curtail the cost structure and expand efficiencies in manufacturing as well as commercial operations.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Lamb Westonthis time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Lamb Westoncurrently has a Zacks Rank #3and an Earnings ESP of 0.00%.

Stocks With Favorable Combinations

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season.

Brown-Forman Corporation BF.B currently has an Earnings ESP of +1.27% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Constellation Brands STZ has an Earnings ESP of +0.25% and a Zacks Rank #3, currently.

Bed Bath &Beyond BBBY has an Earnings ESP of +32.28% and a Zacks Rank #3, at present.

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

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