Time to Buy Lamb Weston's (LW) Stock After Solid Quarterly Results?
After posting favorable results for its fiscal second quarter on Thursday, investors may be wondering if it's time to buy Lamb Weston’s LW stock. In recent years Lamb Weston has been somewhat of a Wall Street darling with the company starting to gain notoriety like other renowned consumer food companies such as General Mills GIS and Hormel Foods HRL.
As it relates to frozen potato products Lamb Weston is the top supplier in North America and has a global footprint as well. Let’s see if now is a good time to buy Lamb Weston’s stock after exceeding its Q2 top and bottom line expectations today.
Q2 Review & Highlights
Lamb Weston CEO Tom Werner stated the company delivered solid financial results in the quarter by executing well across customer channels in North America and key international markets. This was attributed to inflation-driven pricing actions, improvements in customer and product mix, and supply chain productivity cost savings.
Lamb Weston’s net sales increased 36% year over year to $1.73 billion and beat the Zacks consensus by 2%. Adjusted net income increased 17% YoY to $212 million with EPS up 13% to $1.45 per share which beat expectations by 3%.
Other quarterly highlights included Lamb Weston Repurchasing $50 million of common stock and increasing its quarterly dividend by 29% to $0.36 per share.
For its full-year 2024 outlook, Lamb Weston raised its adjusted net income target from $805-$875 million to $830-$900 million or $5.50-$5.95 a share to $5.70-$6.15 per share. The company reaffirmed its net sales target of $6.8-$7 billion and adjusted EBITDA target of $1.54-$1.62 billion.
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Growth & Outlook
According to Zacks estimates, Lamb Weston's annual earnings are currently forecasted to climb 25% in fiscal 2024 to $5.84 per share versus $4.68 a share in 2023. Plus, FY25 earnings are projected to rise another 6%. More impressive, total sales are expected to be up 28% this year to $6.85 billion compared to $5.35 billion last year. Fiscal 2025 sales are slated to edge up another 5% to over $7.1 billion.
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Recent Performance
While other consumer food stocks seem like they have been thrown to the wayside over the last year, Lamb Weston's stock is up a respectable +10% to easily top the Zacks Food-Miscellaneous Markets' -6% while vastly outperforming General Mills’ -22% and Hormel Foods' -30%. Furthermore, Lamb Weston’s stock has risen +40% in the last three years to beat the S&P 500’s +26% and largely outperform its Zacks Subindustry’s -2%, General Mills’ +12%, and Hormel Foods' -29%.
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Bottom Line
Lamb Weston’s stock currently lands a Zacks Rank #3 (Hold). However, the company’s raised EPS guidance could lead to annual earnings estimate revisions trending higher in the following weeks and a buy rating may be on the way as Lamb Weston’s outlook looks even more promising following its Q2 report.
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Lamb Weston (LW) : Free Stock Analysis Report
General Mills, Inc. (GIS) : Free Stock Analysis Report
Hormel Foods Corporation (HRL) : Free Stock Analysis Report
