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Lamb Weston Earnings Preview: Can the Food Manufacturer Stock Reach New Highs?
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Investors have been sorting through companies that can add inflation protection to their portfolios. One such company has been Lamb Weston (LW - Free Report) . The global manufacturer and distributor of value-added frozen potato products has been able to use rising inflation to its advantage.
Investors will want to see if Lamb Weston was able to continue its pricing advantage in the food industry. LW stock is trading only 5% off its highs, and higher highs could be around the corner with another strong quarter and upbeat guidance.
During its fiscal fourth quarter earnings call, CEO Tom Werner stated the company finished the year on a strong note, including a record high-sales quarter fueled by double-digit growth in each of its core segments.
Lamb Weston entered the current quarter and its new fiscal year with strong underlying fundamentals and business momentum. The company believes it will reach its financial targets of strong sales growth and continued improvement in profitability in fiscal 2023 despite challenging operating and inflationary environments.
Performance
Lamb Weston stock is up +24% year to date to crush the S&P 500’s -23%. LW’s stellar performance this year has also shown the company is a leader in the Food-Miscellaneous Industry and its peer group is down -15% YTD.
Image Source: Zacks Investment Research
Even more impressive, while LW is benefitting from high inflation, its strong price performance is reflected over the last five years as well. LW’s stock is up +61% during this time span, also outperforming the benchmark.
Investors will want to see if a strong fiscal first-quarter earnings release can continue propelling the stock. LW beat earnings expectations by 27% last quarter. LW stock was up more than 10% in the following weeks, reaching a 52-week high in August at $83.29 a share.
Outlook
The Zacks Consensus Estimate for LW’s Q1 fiscal 2023 earnings is $0.52 per share, which would represent a 160% increase from Q1 2022. The Zacks Consensus Estimate for the current quarter has remained unchanged in the past 30 days. Sales for Q1 are also expected to be up 16% at $1.14 billion.
Year over year, LW is projected to post 34% earnings growth in both fiscal 2023 and FY24. Solid top line growth is also expected, with FY23 sales projected to climb 15% and another 7% in FY24 to $5.08 billion.
Valuation
Currently trading around $78 a share, LW has a forward P/E of 27.4X. This is higher than its industry average of 17.2X but well below its own high of 45.3X over the last five years.
Image Source: Zacks Investment Research
LW currently trades near its median of 25.2X during this time span and its growth outlook has been stellar despite its Food-Miscellaneous Industry currently in the bottom 33% of over 250 Zacks Industries.
Bottom Line
Lamb Weston’s first-quarter fiscal 2023 earnings will give insight into the company’s ability to continue benefiting from high inflation. With the Food-Miscellaneous Industry including popular branded food companies such as Conagra Brands (CAG - Free Report) , Lamb Weston has seperated itself as a leader. Last quarter showed LW’s stock is able to have big movements to the upside after beating earnings expectations and investors will hope this continues.
Lamb Weston currently sports a Zacks Rank #2 (Buy). It will be important to see if Lamb Weston’s guidance reaffirms the expected earnings growth for next year and into FY24. Perhaps another earnings beat will indeed lead to a sustained rally and higher highs for LW’s stock. The average Zacks Price Target of $90.25 per share sees LW’s stock reaching this goal and suggests 17% upside from current levels.
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Lamb Weston Earnings Preview: Can the Food Manufacturer Stock Reach New Highs?
Investors have been sorting through companies that can add inflation protection to their portfolios. One such company has been Lamb Weston (LW - Free Report) . The global manufacturer and distributor of value-added frozen potato products has been able to use rising inflation to its advantage.
Investors will want to see if Lamb Weston was able to continue its pricing advantage in the food industry. LW stock is trading only 5% off its highs, and higher highs could be around the corner with another strong quarter and upbeat guidance.
During its fiscal fourth quarter earnings call, CEO Tom Werner stated the company finished the year on a strong note, including a record high-sales quarter fueled by double-digit growth in each of its core segments.
Lamb Weston entered the current quarter and its new fiscal year with strong underlying fundamentals and business momentum. The company believes it will reach its financial targets of strong sales growth and continued improvement in profitability in fiscal 2023 despite challenging operating and inflationary environments.
Performance
Lamb Weston stock is up +24% year to date to crush the S&P 500’s -23%. LW’s stellar performance this year has also shown the company is a leader in the Food-Miscellaneous Industry and its peer group is down -15% YTD.
Image Source: Zacks Investment Research
Even more impressive, while LW is benefitting from high inflation, its strong price performance is reflected over the last five years as well. LW’s stock is up +61% during this time span, also outperforming the benchmark.
Investors will want to see if a strong fiscal first-quarter earnings release can continue propelling the stock. LW beat earnings expectations by 27% last quarter. LW stock was up more than 10% in the following weeks, reaching a 52-week high in August at $83.29 a share.
Outlook
The Zacks Consensus Estimate for LW’s Q1 fiscal 2023 earnings is $0.52 per share, which would represent a 160% increase from Q1 2022. The Zacks Consensus Estimate for the current quarter has remained unchanged in the past 30 days. Sales for Q1 are also expected to be up 16% at $1.14 billion.
Year over year, LW is projected to post 34% earnings growth in both fiscal 2023 and FY24. Solid top line growth is also expected, with FY23 sales projected to climb 15% and another 7% in FY24 to $5.08 billion.
Valuation
Currently trading around $78 a share, LW has a forward P/E of 27.4X. This is higher than its industry average of 17.2X but well below its own high of 45.3X over the last five years.
Image Source: Zacks Investment Research
LW currently trades near its median of 25.2X during this time span and its growth outlook has been stellar despite its Food-Miscellaneous Industry currently in the bottom 33% of over 250 Zacks Industries.
Bottom Line
Lamb Weston’s first-quarter fiscal 2023 earnings will give insight into the company’s ability to continue benefiting from high inflation. With the Food-Miscellaneous Industry including popular branded food companies such as Conagra Brands (CAG - Free Report) , Lamb Weston has seperated itself as a leader. Last quarter showed LW’s stock is able to have big movements to the upside after beating earnings expectations and investors will hope this continues.
Lamb Weston currently sports a Zacks Rank #2 (Buy). It will be important to see if Lamb Weston’s guidance reaffirms the expected earnings growth for next year and into FY24. Perhaps another earnings beat will indeed lead to a sustained rally and higher highs for LW’s stock. The average Zacks Price Target of $90.25 per share sees LW’s stock reaching this goal and suggests 17% upside from current levels.