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Here's Why Lamb Weston Appears to be an Appetizing Pick Now
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Lamb Weston Holdings, Inc. (LW - Free Report) appears to be a delectable pick, with its shares up 9.8% in the past three months, outpacing the industry’s growth of 6%. It has also outdone the Zacks Consumer Staples sector and the S&P 500’s respective gains of 7.8% and 8.5%. Notably, the company has been benefiting from burgeoning demand for frozen potato products in its Retail segment, thanks to elevated at-home consumption. This was witnessed in the first-quarter fiscal 2021 results, wherein earnings beat the consensus mark by a wide margin.
Though sales were partly hurt by hurdles in the foodservice channel, the company’s retail business remained strong. We believe that higher consumption amid the pandemic is likely to keep aiding Lamb Weston’s retail business in the near term. Incidentally, the Zacks Consensus Estimate for fiscal 2021 earnings per share has increased 14.4% to $2.38 in the past seven days. That said, let’s delve deeper into the factors adding to this Zacks Rank #2 (Buy) stock’s growth story. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Lamb Weston Holdings Inc. Price, Consensus and EPS Surprise
Lamb Weston boasts of a solid Retail segment, which comprises of revenues from private label and branded items to mass merchant, grocery and club customers across North America. The company’s Retail business sales grew 19% to $153.9 million in the first quarter. Price/mix and volumes increased 8% and 11%, respectively. Volumes were backed by increased demand due to the pandemic-led higher at-home consumption. Retail demand for branded products remained steady in the quarter. Also, the product contribution margin rose 24% to $35.8 million on the back of increased sales volume, improved mix, and reduced advertising and promotional costs.
Markedly, Conagra Brands (CAG - Free Report) , B&G Foods (BGS - Free Report) and Flowers Foods (FLO - Free Report) are also some of the other food companies riding on the elevated pandemic-led demand trends. Meanwhile, Lamb Weston 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 are nearly 90% of the prior-year levels, driven by demand from quick-serve restaurants and retail, along with continued recovery at full-service restaurants.
Other Drivers
Lamb Weston’s top line has been benefiting from robust price/mix, as also witnessed during the first quarter of fiscal 2021. During the quarter, price/mix rose 2% on the back of improvement in the Retail and Foodservice segments. This somewhat aided sales, which were otherwise negatively impacted by lower volumes. Price/mix rose 8% and 6% in the Retail and Foodservice segments, respectively. Continuity of such trends is likely to augment sales.
Apart from this, the company has been undertaking initiatives to boost offerings and operating capacity. Such efforts enable the company to effectively meet rising demand conditions for snacks and fries. These upsides are likely to help it tide over hurdles related to soft away-from-home food demand due to the adverse impact of coronavirus on restaurants and other foodservice-related traffic. Also, Lamb Weston is on track with cost-management initiatives, which should help it tackle high COVID-19-related costs.
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Here's Why Lamb Weston Appears to be an Appetizing Pick Now
Lamb Weston Holdings, Inc. (LW - Free Report) appears to be a delectable pick, with its shares up 9.8% in the past three months, outpacing the industry’s growth of 6%. It has also outdone the Zacks Consumer Staples sector and the S&P 500’s respective gains of 7.8% and 8.5%. Notably, the company has been benefiting from burgeoning demand for frozen potato products in its Retail segment, thanks to elevated at-home consumption. This was witnessed in the first-quarter fiscal 2021 results, wherein earnings beat the consensus mark by a wide margin.
Though sales were partly hurt by hurdles in the foodservice channel, the company’s retail business remained strong. We believe that higher consumption amid the pandemic is likely to keep aiding Lamb Weston’s retail business in the near term. Incidentally, the Zacks Consensus Estimate for fiscal 2021 earnings per share has increased 14.4% to $2.38 in the past seven days. That said, let’s delve deeper into the factors adding to this Zacks Rank #2 (Buy) stock’s growth story. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Lamb Weston Holdings Inc. Price, Consensus and EPS Surprise
Lamb Weston Holdings Inc. price-consensus-eps-surprise-chart | Lamb Weston Holdings Inc. Quote
Robust Retail Business
Lamb Weston boasts of a solid Retail segment, which comprises of revenues from private label and branded items to mass merchant, grocery and club customers across North America. The company’s Retail business sales grew 19% to $153.9 million in the first quarter. Price/mix and volumes increased 8% and 11%, respectively. Volumes were backed by increased demand due to the pandemic-led higher at-home consumption. Retail demand for branded products remained steady in the quarter. Also, the product contribution margin rose 24% to $35.8 million on the back of increased sales volume, improved mix, and reduced advertising and promotional costs.
Markedly, Conagra Brands (CAG - Free Report) , B&G Foods (BGS - Free Report) and Flowers Foods (FLO - Free Report) are also some of the other food companies riding on the elevated pandemic-led demand trends. Meanwhile, Lamb Weston 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 are nearly 90% of the prior-year levels, driven by demand from quick-serve restaurants and retail, along with continued recovery at full-service restaurants.
Other Drivers
Lamb Weston’s top line has been benefiting from robust price/mix, as also witnessed during the first quarter of fiscal 2021. During the quarter, price/mix rose 2% on the back of improvement in the Retail and Foodservice segments. This somewhat aided sales, which were otherwise negatively impacted by lower volumes. Price/mix rose 8% and 6% in the Retail and Foodservice segments, respectively. Continuity of such trends is likely to augment sales.
Apart from this, the company has been undertaking initiatives to boost offerings and operating capacity. Such efforts enable the company to effectively meet rising demand conditions for snacks and fries. These upsides are likely to help it tide over hurdles related to soft away-from-home food demand due to the adverse impact of coronavirus on restaurants and other foodservice-related traffic. Also, Lamb Weston is on track with cost-management initiatives, which should help it tackle high COVID-19-related costs.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot stocks we're targeting >>