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Will Global Segment Drive Lamb Weston (LW) in Q4 Earnings?
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Lamb Weston Holdings, Inc. (LW - Free Report) is slated to release fourth-quarter fiscal 2018 results on Jul 25. The Idaho-based company has a positive earnings surprise record over the trailing four quarters, with a 1.9% beat delivered in the last reported quarter. Let’s see what’s in store for Lamb Weston this time around.
How Are Top & Bottom Line Estimates Faring?
The current Zacks Consensus Estimate for the quarter under review is pegged at 62 cents, which shows a 21.6% rise from 51 cents recorded in the year-ago period. The estimate remained unchanged over the past 30 days. Further, we expect revenues of $886.8 million, up 6.5% from the year-ago reported figure. The company’s top and bottom line also grew year over year in the last reported quarter by 12% and 54%, respectively.
Lamb Weston, which was spun off from Conagra (CAG - Free Report) in November 2016, is witnessing increasing sales year over year for quite some time now. The strong sales performance is attributable to its limited time offers or LTO innovations, which play a key role in the company’s long-term prospects. Management remains positive about further prospects from new LTOs. It expects the company’s new French Fries line to provide it with more flexibility to enter into tie-ups with customers and boost traffic.
Further, Global segment accounted for more than half of Lamb Weston’s third-quarter sales and remains a major driver for the future. Sales at this segment rose 15% to $448 million, thanks to better price/mix and higher volumes. Volumes gained from various limited period product offers or LTOs, along with strong sales to strategic consumers. Strength in both these factors is likely to drive volume growth in this segment, throughout fiscal 2018.
Moreover, Lamb Weston’s top line has been gaining from its robust pricing strategy, which is evident from the fact that pricing drove sales across all segments in the third quarter. Notably, Lamb Weston’s sales grew on the back of a 7% rise in price/mix. This was backed by implementation of various new pricing structures related to recently renewed deals in the Global unit and in the retail unit, to an extent. Management expects new pricing structure to continue fueling Global price/mix growth in the fourth quarter. Also, overall price/mix is expected to rise in fiscal 2018, which gives out positive signals for the quarter to be reported.
The above-mentioned factors are likely to drive the company’s top line in the near future. Analysts polled by Zacks expects sales in the Foodservice, Global and Retail categories to be $288 million, $459 million and $103 million, up 3.8%, 8.9% and 4% year over year, respectively.
However, for fiscal 2018, management expects SG&A costs to be higher than what it had expected earlier. This may pose threats to the fourth quarter. Higher SG&A costs can be accountable to increased labor benefits and infrastructure expenses, higher incentive compensation expenses, and accelerated investments in advertising and promotions in the retail unit, as part of expansions of Grown in Idaho products.
Also, raw potato prices are expected to rise in low to mid-single-digit range in the fiscal. These factors, along with increased transportation, warehousing and commodity costs may hurt margins. Near-term issues in the foodservice unit are also significant concerns.
What the Zacks Model Unveils
Our proven model doesn’t show that Lamb Weston is likely to beat bottom-line estimates this quarter. For this to happen, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Although Lamb Weston carries a Zacks Rank #2, the company’s Earnings ESP of -2.70% makes surprise prediction difficult.
Stocks Poised to Beat Earnings Estimates
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:
B&G Foods (BGS - Free Report) , a Zacks #2 Ranked stock, has an Earnings ESP of +2.38%.
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Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
Will Global Segment Drive Lamb Weston (LW) in Q4 Earnings?
Lamb Weston Holdings, Inc. (LW - Free Report) is slated to release fourth-quarter fiscal 2018 results on Jul 25. The Idaho-based company has a positive earnings surprise record over the trailing four quarters, with a 1.9% beat delivered in the last reported quarter. Let’s see what’s in store for Lamb Weston this time around.
How Are Top & Bottom Line Estimates Faring?
The current Zacks Consensus Estimate for the quarter under review is pegged at 62 cents, which shows a 21.6% rise from 51 cents recorded in the year-ago period. The estimate remained unchanged over the past 30 days. Further, we expect revenues of $886.8 million, up 6.5% from the year-ago reported figure. The company’s top and bottom line also grew year over year in the last reported quarter by 12% and 54%, respectively.
Lamb Weston Holdings Inc. Price and EPS Surprise
Lamb Weston Holdings Inc. Price and EPS Surprise | Lamb Weston Holdings Inc. Quote
Factors to Consider
Lamb Weston, which was spun off from Conagra (CAG - Free Report) in November 2016, is witnessing increasing sales year over year for quite some time now. The strong sales performance is attributable to its limited time offers or LTO innovations, which play a key role in the company’s long-term prospects. Management remains positive about further prospects from new LTOs. It expects the company’s new French Fries line to provide it with more flexibility to enter into tie-ups with customers and boost traffic.
Further, Global segment accounted for more than half of Lamb Weston’s third-quarter sales and remains a major driver for the future. Sales at this segment rose 15% to $448 million, thanks to better price/mix and higher volumes. Volumes gained from various limited period product offers or LTOs, along with strong sales to strategic consumers. Strength in both these factors is likely to drive volume growth in this segment, throughout fiscal 2018.
Moreover, Lamb Weston’s top line has been gaining from its robust pricing strategy, which is evident from the fact that pricing drove sales across all segments in the third quarter. Notably, Lamb Weston’s sales grew on the back of a 7% rise in price/mix. This was backed by implementation of various new pricing structures related to recently renewed deals in the Global unit and in the retail unit, to an extent. Management expects new pricing structure to continue fueling Global price/mix growth in the fourth quarter. Also, overall price/mix is expected to rise in fiscal 2018, which gives out positive signals for the quarter to be reported.
The above-mentioned factors are likely to drive the company’s top line in the near future. Analysts polled by Zacks expects sales in the Foodservice, Global and Retail categories to be $288 million, $459 million and $103 million, up 3.8%, 8.9% and 4% year over year, respectively.
However, for fiscal 2018, management expects SG&A costs to be higher than what it had expected earlier. This may pose threats to the fourth quarter. Higher SG&A costs can be accountable to increased labor benefits and infrastructure expenses, higher incentive compensation expenses, and accelerated investments in advertising and promotions in the retail unit, as part of expansions of Grown in Idaho products.
Also, raw potato prices are expected to rise in low to mid-single-digit range in the fiscal. These factors, along with increased transportation, warehousing and commodity costs may hurt margins. Near-term issues in the foodservice unit are also significant concerns.
What the Zacks Model Unveils
Our proven model doesn’t show that Lamb Weston is likely to beat bottom-line estimates this quarter. For this to happen, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Although Lamb Weston carries a Zacks Rank #2, the company’s Earnings ESP of -2.70% makes surprise prediction difficult.
Stocks Poised to Beat Earnings Estimates
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:
The Boston Beer Company (SAM - Free Report) , a Zacks #1 Ranked stock, has an Earnings ESP of +13.00%. You can see the complete list of today’s Zacks #1 Rank stocks here.
B&G Foods (BGS - Free Report) , a Zacks #2 Ranked stock, has an Earnings ESP of +2.38%.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>