Lamb Weston Holdings, Inc. (LW) is a leading global manufacturer of value-added frozen potato products, with a market cap of $9.6 billion. The Eagle, Idaho-based company primarily serves retail and food service customers, offering a range of products, including French fries and appetizers.
Companies valued at less than $10 billion or more are generally considered “mid-cap” stocks, and Lamb Weston fits this criterion perfectly. Lamb Weston distinguishes itself in the market by being one of the largest producers of frozen potato products, with over 70 years of innovation and a presence in more than 100 countries, while employing over 10,000 people globally.
However, the potato products supplier pulled back 40.6% from its 52-week high of $111.88, recorded in January. Shares of Lamb Weston have declined 20.9% over the past three months, lagging behind The Consumer Staples Select Sector SPDR Fund’s (XLP) 7.3% increase over the same time frame.
Nevertheless, longer term, LW stock is down 38.5% on a YTD basis, underperforming XLP’s 15.1% rise. Moreover, shares of Lamb Weston have dipped nearly 28% over the past 52 weeks, compared to XLP’s 19.5% return over the same time frame.
LW stock has been trading above its 50-day and 200-day moving averages since early April. But, the stock climbed above its 50-day moving average on Sep. 16.
Lamb Weston stock tanked on Jul. 24 after the company reported weaker-than-expected Q4 adjusted EPS of $0.78 and revenue of $1.6 billion. The disappointing results highlighted that while net sales rose 21% year-over-year, 99% of this growth was due to acquisitions, and management warned of tough consumer demand trends for fiscal 2025, projecting only 5% top-line growth alongside a decline in net profits. Additionally, the wide range of expected net income for the year, between $630 million and $705 million, indicated significant uncertainty, which alarmed investors and contributed to a 28.2% drop in stock price.
In comparison, rival Conagra Brands, Inc. (CAG) is outperforming LW. Shares of Conagra Brands have gained nearly 16% over the past 52 weeks and 13.4% on a YTD basis.
Despite LW’s weak price action, analysts are moderately optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from the 10 analysts covering the stock, and the mean price target of $70.30 suggests a premium of just 5.7% to current levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
