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Lamb Weston (LW) Rises More Than 25% in 6 Months: Here's Why
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Lamb Weston Holdings, Inc. (LW - Free Report) appears well positioned, courtesy of strength in its strategic growth efforts including capacity expansion. The provider of value-added frozen potato products is benefiting from the focus on effective pricing efforts.
The upsides mentioned above boosted LW’s third-quarter fiscal 2023 results, with the top and the bottom line increasing year over year and beating the Zacks Consensus Estimate. Impressively, management raised its fiscal 2023 guidance.
This Zacks Rank #1 (Strong Buy) stock has gained 27.4% in the past six months compared with the industry’s 7.2% growth. The stock has comfortably outperformed the Zacks Consumer Staples sector’s 10.1% growth. Let’s delve deeper.
Image Source: Zacks Investment Research
Robust Q3 Results & Raised View
Lamb Weston’s third-quarter fiscal 2023 performance benefited from broad-based growth, with solid sales and earnings performance in every core business segment. LW’s bottom line came in at $1.43 per share, which increased 127%. The company’s net sales amounted to $1,253.6 million, up 31%. Sales in the Global segment increased 33% to $648.5 million. In the Foodservice unit, sales increased 22% to $360 million. In the Retail segment, sales went up 50% to $216 million.
Management raised its fiscal 2023 guidance, which includes the consolidation of the European joint venture in the fiscal fourth quarter. For fiscal 2023, management now expects net sales growth in the range of $5.25-$5.35 billion. Earlier, the company anticipated delivering net sales in the range of $4.8-$4.9 billion.
Adjusted EBITDA (including unconsolidated joint ventures) is likely to come in the range of $1,180-$1,210 million compared with the $1,050-$1,100 million forecast earlier. Adjusted diluted earnings per share are envisioned in the range of $4.35-$4.50, up from the previous guidance of $3.75-$4.00.
Capacity Expansion on Track
Lamb Weston’s sturdy balance sheet and capacity to generate cash keep it well-placed to boost production capacity and fuel long-term growth. Its efforts to boost offerings and expand capacity enable the company to effectively meet rising demand conditions for snacks and fries.
In the third quarter of fiscal 2023, LW’s capital expenditures came in at roughly $500 million. This reflects construction costs as the company is on track to expand its processing capacity in Idaho, China and Argentina. For fiscal 2023, it expects cash used for capital expenditures in the band of $700-$725 million.
Apart from the capacity-expansion endeavors mentioned above, the company concluded (in February 2023) the buyout of remaining equity interests in its European joint venture with Meijer Frozen Foods B.V. The move strengthens its ability to serve customers across key markets globally. Management (in July 2022) bought an additional 40% stake in Lamb Weston Alimentos Modernos S.A. ("LWAMSA"), its joint venture in Argentina, taking its total ownership to 90%.
Pricing Actions Solid
Lamb Weston’s top line has been benefiting from robust price/mix, as witnessed during the third quarter of fiscal 2023. The price/mix increased 31%, reflecting gains from pricing actions across its core business units undertaken to counter input and manufacturing cost inflation.
In the Global segment, price/mix grew 33% on gains from domestic and international pricing actions to counter inflationary pressures. Foodservice segment price/mix benefited from the carryover benefits of pricing actions undertaken in the previous year and moves made in fiscal 2023 to battle inflationary headwinds. In the Retail segment, price/mix surged 44%. The upside can be attributed to the carryover impact of pricing actions in the branded and private label portfolios and pricing actions carried over in fiscal 2023.
We believe that such effective pricing actions, coupled with the aforementioned upsides, are likely to keep Lamb Weston’s growth story going.
General Mills, a branded consumer foods company, currently carries a Zacks Rank #2 (Buy). GIS has a trailing four-quarter earnings surprise of 8.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for General Mills’ current fiscal-year sales and earnings suggests growth of 6.3% and 7.4%, respectively, from the corresponding year-ago reported figures.
Beyond Meat, which develops, manufactures, markets and sells plant-based meat products, currently carries a Zacks Rank #2. BYND has a trailing four-quarter negative earnings surprise of 29.3%, on average.
The Zacks Consensus Estimate for Beyond Meat’s current fiscal-year earnings suggests an increase of 39.7% from the year-ago reported number.
Kimberly Clark is engaged in the manufacture and marketing of a wide range of consumer products around the world. It currently has a Zacks Rank of 2. KMB has a trailing four-quarter earnings surprise of 1.4%, on average.
The Zacks Consensus Estimate for Kimberly Clark’s current financial year sales and earnings suggests growth of 1.7% and 5.2%, respectively, from the year-ago reported numbers.
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Lamb Weston (LW) Rises More Than 25% in 6 Months: Here's Why
Lamb Weston Holdings, Inc. (LW - Free Report) appears well positioned, courtesy of strength in its strategic growth efforts including capacity expansion. The provider of value-added frozen potato products is benefiting from the focus on effective pricing efforts.
The upsides mentioned above boosted LW’s third-quarter fiscal 2023 results, with the top and the bottom line increasing year over year and beating the Zacks Consensus Estimate. Impressively, management raised its fiscal 2023 guidance.
This Zacks Rank #1 (Strong Buy) stock has gained 27.4% in the past six months compared with the industry’s 7.2% growth. The stock has comfortably outperformed the Zacks Consumer Staples sector’s 10.1% growth. Let’s delve deeper.
Image Source: Zacks Investment Research
Robust Q3 Results & Raised View
Lamb Weston’s third-quarter fiscal 2023 performance benefited from broad-based growth, with solid sales and earnings performance in every core business segment. LW’s bottom line came in at $1.43 per share, which increased 127%. The company’s net sales amounted to $1,253.6 million, up 31%. Sales in the Global segment increased 33% to $648.5 million. In the Foodservice unit, sales increased 22% to $360 million. In the Retail segment, sales went up 50% to $216 million.
Management raised its fiscal 2023 guidance, which includes the consolidation of the European joint venture in the fiscal fourth quarter. For fiscal 2023, management now expects net sales growth in the range of $5.25-$5.35 billion. Earlier, the company anticipated delivering net sales in the range of $4.8-$4.9 billion.
Adjusted EBITDA (including unconsolidated joint ventures) is likely to come in the range of $1,180-$1,210 million compared with the $1,050-$1,100 million forecast earlier. Adjusted diluted earnings per share are envisioned in the range of $4.35-$4.50, up from the previous guidance of $3.75-$4.00.
Capacity Expansion on Track
Lamb Weston’s sturdy balance sheet and capacity to generate cash keep it well-placed to boost production capacity and fuel long-term growth. Its efforts to boost offerings and expand capacity enable the company to effectively meet rising demand conditions for snacks and fries.
In the third quarter of fiscal 2023, LW’s capital expenditures came in at roughly $500 million. This reflects construction costs as the company is on track to expand its processing capacity in Idaho, China and Argentina. For fiscal 2023, it expects cash used for capital expenditures in the band of $700-$725 million.
Apart from the capacity-expansion endeavors mentioned above, the company concluded (in February 2023) the buyout of remaining equity interests in its European joint venture with Meijer Frozen Foods B.V. The move strengthens its ability to serve customers across key markets globally. Management (in July 2022) bought an additional 40% stake in Lamb Weston Alimentos Modernos S.A. ("LWAMSA"), its joint venture in Argentina, taking its total ownership to 90%.
Pricing Actions Solid
Lamb Weston’s top line has been benefiting from robust price/mix, as witnessed during the third quarter of fiscal 2023. The price/mix increased 31%, reflecting gains from pricing actions across its core business units undertaken to counter input and manufacturing cost inflation.
In the Global segment, price/mix grew 33% on gains from domestic and international pricing actions to counter inflationary pressures. Foodservice segment price/mix benefited from the carryover benefits of pricing actions undertaken in the previous year and moves made in fiscal 2023 to battle inflationary headwinds. In the Retail segment, price/mix surged 44%. The upside can be attributed to the carryover impact of pricing actions in the branded and private label portfolios and pricing actions carried over in fiscal 2023.
We believe that such effective pricing actions, coupled with the aforementioned upsides, are likely to keep Lamb Weston’s growth story going.
Solid Staple Bets
Some other top-ranked consumer staple stocks are General Mills (GIS - Free Report) , Beyond Meat (BYND - Free Report) and Kimberly-Clark Corporation (KMB - Free Report) .
General Mills, a branded consumer foods company, currently carries a Zacks Rank #2 (Buy). GIS has a trailing four-quarter earnings surprise of 8.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for General Mills’ current fiscal-year sales and earnings suggests growth of 6.3% and 7.4%, respectively, from the corresponding year-ago reported figures.
Beyond Meat, which develops, manufactures, markets and sells plant-based meat products, currently carries a Zacks Rank #2. BYND has a trailing four-quarter negative earnings surprise of 29.3%, on average.
The Zacks Consensus Estimate for Beyond Meat’s current fiscal-year earnings suggests an increase of 39.7% from the year-ago reported number.
Kimberly Clark is engaged in the manufacture and marketing of a wide range of consumer products around the world. It currently has a Zacks Rank of 2. KMB has a trailing four-quarter earnings surprise of 1.4%, on average.
The Zacks Consensus Estimate for Kimberly Clark’s current financial year sales and earnings suggests growth of 1.7% and 5.2%, respectively, from the year-ago reported numbers.