Will Pricing Actions Drive Lamb Weston's (LW) Q1 Earnings?
Lamb Weston Holdings, Inc. LW is ready to report first-quarter fiscal 2024 earnings on Oct 5. It is worth taking a closer look at the company’s robust pricing actions, which is aiding its growth for a while now. We believe that continuation of this trend is likely to have played a key role in determining LW’s performance in the quarter under review.
Pricing Actions in Details
Lamb Weston has been benefiting from effective pricing efforts. It undertakes robust pricing actions in every core business unit to counter input and manufacturing cost inflation.
In fourth-quarter fiscal 2023, the price/mix increased 24% on gains from pricing actions in its core business units. In the Global segment, price/mix grew 28% on gains from domestic and international pricing efforts. Price/mix climbed 13% in the Foodservice unit. In Retail business, price/mix advanced 35% on pricing actions undertaken in branded and private label portfolios.
Lamb Weston Price and EPS Surprise
Lamb Weston price-eps-surprise | Lamb Weston Quote
In its last earnings call, management highlighted that it expects overall inflation-driven pricing environment to remain a primary growth driver. That said, these efforts are likely to be more modest compared with fiscal 2023 level.
Lamb Weston’s pricing actions along with improved product and customer mix stemming from revenue growth, management initiatives and supply-chain productivity bode well in the quarter under review.
We expect price/mix to grow 28.5% in the first quarter of fiscal 2024. Our model suggests price/mix growth to be 28.5%, 23.3% and 39.5% in the Global, Foodservice and Retails segments, respectively.
Other Factors to Consider
LW is on track with solid offerings and expanding capacity, which enables the company to effectively meet rising demand conditions for snacks and fries. It is continuing with investments to boost supply-chain, commercial and information technology operations. However, soft demand owing to dynamic restaurant traffic trends and persistent macro pressures on the consumer might have been concerns.
How Are Estimates Placed?
The Zacks Consensus Estimate for LW’s quarterly revenues is pegged at $1.59 billion, suggesting an increase of 41.6% from the prior-year quarter’s reported figure. The consensus mark for earnings has moved up by a penny in the past seven days to $1.09 per share, indicating growth of 45.3% from the year-ago quarter’s reported level. LW has a trailing four-quarter earnings surprise of 44.8%, on average.
Lamb Weston carries a Zacks Rank #2 (Buy) and has an Earnings ESP of -5.51%. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) increases the chances of an earnings beat, which is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks With Favorable Combination
Here are three companies worth considering, as our model shows that these have the right elements to beat on earnings this time.
Flowers Foods FLO currently has an Earnings ESP of +1.54% and carries a Zacks Rank #2. The company will likely register top-line growth when it reports second-quarter fiscal 2023 numbers. The Zacks Consensus Estimate for FLO’s quarterly revenues is pegged at $1.2 billion, implying a rise of 5.2% from the prior-year quarter’s reported figure. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Flowers Foods’ quarterly earnings per share of 28 cents suggests a dip of 6.7% from the year-ago quarter’s levels. FLO has a trailing four-quarter earnings surprise of 7.6%, on average.
Conagra Brands CAG currently has an Earnings ESP of +1.73% and a Zacks Rank of 3. The company is likely to witness top and bottom-line improvements while reporting first-quarter fiscal 2024 results. The Zacks Consensus Estimate for quarterly earnings has remained unchanged in the last 30 days at 60 cents per share. The estimated figure, however, predicts 5.3% growth from the year-ago quarter's reported number.
The Zacks Consensus Estimate for Conagra’s quarterly revenues is pegged at $2.95 billion, suggesting 1.4% year-over-year growth. CAG has delivered an earnings surprise of 13.6%, on average, in the trailing four quarters.
Hershey HSY currently has an Earnings ESP of +2.21% and a Zacks Rank #3. It is likely to record top and bottom-line gains while posting third-quarter 2023 results. The Zacks Consensus Estimate for quarterly earnings per share of $2.48 suggests a 14.3% rise from the year-ago quarter’s reported number.
The Zacks Consensus Estimate for Hershey’s quarterly revenues is pegged at about $3 billion, indicating 9.2% jump from the prior-year quarter’s reported figure. HSY has a trailing four-quarter earnings surprise of 8.9%, on average.
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Hershey Company (The) (HSY) : Free Stock Analysis Report
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