Lamb Weston Holdings, Inc. (LW - Free Report) is focused on boosting investors’ sentiments through several growth initiatives and shareholder-friendly moves. Well, such upsides have aided the stock to rally 28.1% year to date, against the industry’s fall of 21.6%. Let’s take a closer look at these aspects, which are likely to help the company maintain the solid bull-run in 2019.
Efforts to Boost Shareholder Returns
Lamb Weston is committed to providing timely dividends to shareholders. We note that in the last reported quarter, the company paid dividends worth $28 million. Further, management focuses on maintaining an annual dividend payout ratio of 25-35% of the bottom line. Recently, the company announced a quarterly dividend hike to 20 cents from 19.125 cents per share. The raised dividend, which reflects an increase of almost 4.5%, is payable on Mar 1, 2019 to shareholders of record as on Feb 1.
We appreciate McCormick’s efforts to consistently enhance long-term shareholders’ value. Markedly, dividend hikes not only enhance shareholder returns but also raise the market value of the stock. Through this strategy, companies try to attract investors and persuade them to either buy or hold the stock.
Apart from the dividend hike, the company announced a share repurchase program, per which it can buy back shares worth up to $250 million. Management has not revealed the expiration date of this new share repurchase plan.
Other Strategies to Boost Performance
Apart from the aforementioned aspects, Lamb Weston concentrates on other efficient capital allocation strategies, like making constant investments to enhancing capacity, improving customer services, undertaking innovations and boosting limited time offerings (LTOs). In fact, backed by such efforts, sales have been increasing year over year ever since it completed a fiscal post its spin-off from Conagra Brands (CAG - Free Report) .
We note that LTOs have played a major role in driving growth and market share gains in fiscal 2018. Also, in the first quarter of fiscal 2019, LTOs accounted for significant volume growth in the Global segment. Management is positive about additional prospects from new LTOs, as it expects the new French Fries line to provide it more flexibility to enter into tie-ups with customers and boost traffic.
Additionally, the company is gaining from new pricing structures related to recently renewed deals in the Global unit as well as consistent impacts of pricing and mix enhancement initiatives undertaken in the Retail and Foodservice units.
Moreover, management expects the operating environment to be favorable for the rest of fiscal 2019. It also anticipates continued robust demand for frozen potato products. Additionally, growth opportunities in its North American and export ventures look promising. All said, the company is well positioned to achieve its fiscal 2019 goals
All said, we expect this Zacks Rank #2 (Buy) company to continue being a preferred investment pick in 2019.
Craving for Food Stocks? Check These
Chefs’ Warehouse (CHEF - Free Report) , with long-term earnings per share (EPS) growth rate of 19%, carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
McCormick & Company, Incorporated (MKC - Free Report) has long-term EPS growth rate of 9% and a Zacks Rank #2.
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