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Things to Note as Lamb Weston (LW) Lines Up for Q4 Earnings

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Lamb Weston Holdings, Inc. (LW - Free Report) is likely to register top and bottom-line growth when it reports fourth-quarter fiscal 2022 earnings on Jul 27. The Zacks Consensus Estimate for quarterly revenues is pegged at $1,068 million, suggesting a rise of nearly 6% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for quarterly earnings has risen by a penny in the past 30 days to 51 cents per share, suggesting an increase of 15.9% from the figure reported in the prior-year quarter. This frozen potato products company has a trailing four-quarter earnings surprise of 18.1%, on average. LW delivered an earnings surprise of 65.9% in the last reported quarter.

Lamb Weston Price, Consensus and EPS Surprise

Lamb Weston Price, Consensus and EPS Surprise

Lamb Weston price-consensus-eps-surprise-chart | Lamb Weston Quote

Factors to Note

Lamb Weston has been benefiting from the recovery in the Foodservice business. The continued rebound in demand from full-service restaurants and non-commercial channels like lodging and hospitality, healthcare, schools and universities, sports and entertainment and workplace environments has been aiding volumes.

The company’s robust price/mix has been a driver, more so amid the rising cost inflation.  On its last earnings call, management stated that for fiscal 2022, it expects the net sales growth to exceed its long-term goal of low-to-mid single digits. The company expects fourth-quarter fiscal 2022 net sales growth to have been fueled mainly by the price/mix, indicating its pricing actions to counter input and transportation cost inflation. Apart from this, Lamb Weston’s efforts to boost offerings and expand capacity have been enabling the company to effectively meet rising demand conditions for snacks and fries.

However, on its last earnings call, management highlighted that net income and adjusted EBITDA (including unconsolidated joint ventures) are likely to be under pressure in the fourth quarter of fiscal 2022. The company continues to navigate through major inflation for key production inputs, transportation and packaging. Also, industry-wide operational challenges like labor and commodity shortages might have been a concern. It also expects raw potato costs on a per-pound basis to have increased. Apart from this, LW expects continued investments in information technology to have caused a year-over-year increase in SG&A expenses during the fiscal fourth quarter.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Lamb Weston this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here.

Lamb Weston sports a Zacks Rank #1 and has an Earnings ESP of +0.99%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks With the Favorable Combination

Here are some other companies you may want to consider as our model shows that these also have the right combination of elements to post an earnings beat.

Corteva (CTVA - Free Report) currently has an Earnings ESP of +0.20% and a Zacks Rank of 1. The company is likely to register an increase in the bottom line when it reports second-quarter 2022 results. The Zacks Consensus Estimate for quarterly earnings has risen by a penny over the past seven days to $1.47 per share in the past 30 days. The consensus mark for CTVA’s earnings suggests 5% growth from the year-ago quarter’s reported number. You can see the complete list of today’s Zacks #1 Rank stocks here.

Corteva’s top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $6.2 billion, which suggests a rise of 9.8% from the figure reported in the prior-year quarter. CTVA delivered an earnings beat of 22.3%, on average, in the trailing four quarters.

Archer Daniels (ADM - Free Report) currently has an Earnings ESP of +1.56% and a Zacks Rank of 3. The company is likely to register an increase in the bottom line when it reports second-quarter 2022 results. The Zacks Consensus Estimate for ADM’s quarterly earnings has moved up 3.5% in the past 30 days to $1.75 per share. The consensus mark indicates 31.6% growth from the year-ago quarter’s reported number.

Archer Daniels’ top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $25.3 billion, which suggests a rise of 10.2% from the figure reported in the prior-year quarter. ADM delivered an earnings beat of 22.3%, on average, in the trailing four quarters.

Tyson Foods (TSN - Free Report) currently has an Earnings ESP of +5.71% and a Zacks Rank of 3. The company is likely to register a rise in the top line when it reports third-quarter fiscal 2022 results. The Zacks Consensus Estimate for TSN’s quarterly revenues is pegged at $13.4 billion, which suggests a jump of 7% from the figure reported in the prior-year quarter.

The consensus mark for Tyson Foods’ quarterly earnings has moved down from $1.92 to $1.88 per share in the past 30 days. The consensus estimate for TSN’s third-quarter earnings suggests a decline of 30.4% from the year-ago quarter’s reported figure. Tyson Foods delivered an earnings beat of 33.3%, on average, in the trailing four quarters.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.