Lamb Weston (LW) stock had a slow start Wednesday but was last seen higher after the french fry maker beat top- and bottom-line expectations for its fiscal first quarter.
LW also announced a restructuring plan and updated its full-year profit outlook.
In the 13 weeks ended August 25, Lamb Weston's revenue slipped 0.7% year over year to $1.65 billion. Its earnings per share (EPS) decreased 55.2% from the year-ago period to 73 cents.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"We delivered first quarter financial results that were generally in line with our expectations, driven by sequentially improved volume performance, solid price/mix, and strict management of operating costs," said Lamb Weston CEO Tom Werner in a statement.
But the executive added that "restaurant traffic and frozen potato demand, relative to supply, continue to be soft, and we believe it will remain soft through the remainder of fiscal 2025."
The results topped analysts' expectations. Wall Street was anticipating revenue of $1.56 billion and earnings of 72 cents per share, according to TipRanks.
Lamb Weston also announced a restructuring plan to reduce operating expenses and "better manage" its factory utilization rates, which includes closing its plant in Connell, Washington, reducing its global workforce by approximately 4% and eliminating certain unfilled job positions. The initiatives are expected to generate $55 million in pre-tax cost savings and reduce capital expenditures by $100 million in fiscal 2025.
As a result of the restructuring plan, Lamb Weston updated its full-year profit outlook. The company now anticipates EPS in the range of $4.15 to $4.35, which is down from its previous forecast of $4.35 to $4.85. However, it continues to expect that revenue will range between $6.6 billion to $6.8 billion.
"These actions are proactive steps designed to improve our operating efficiency, profitability and cash flows, while also positioning us to continue to make strategic investments to support our customers and create value for our stakeholders over the long-term," Werner said.
Is Lamb Weston stock a buy, sell or hold?
Lamb Weston has struggled on the price charts so far in 2024, down 29% on a total return basis (price change plus dividends). Most of Wall Street remains bullish on the consumer staples stock.
According to S&P Global Market Intelligence, the average analyst target price for LW stock is $71.69, representing implied upside of roughly 8% to current levels. Additionally, the consensus recommendation is Buy.
However, not everyone is as upbeat. Financial services firm Stifel, for instance, has a Hold rating and $60 price target on the mid-cap stock.
"Our Hold rating reflects the slower growth environment for Lamb Weston as the company contends with weaker demand and lower processing capacity utilization across the industry," says Stifel analyst Matthew Smith. "We believe pricing power will continue to be limited as the company invests to improve recover and improve its market share."
Related Content
-
What the Comcast Cable Spinoff Means for InvestorsComcast has announced plans to spin off select cable networks and digital assets into a separate publicly traded company. Here's what you need to know.
-
TJX Stock: Wall Street Stays Bullish After EarningsTJX stock is trading lower Wednesday despite the TJ Maxx owner's beat-and-raise quarter, but analysts aren't worried. Here's why.
-
What the Comcast Cable Spinoff Means for Investors
Comcast has announced plans to spin off select cable networks and digital assets into a separate publicly traded company. Here's what you need to know.
-
TJX Stock: Wall Street Stays Bullish After Earnings
TJX stock is trading lower Wednesday despite the TJ Maxx owner's beat-and-raise quarter, but analysts aren't worried. Here's why.
-
Target Is the Worst S&P 500 Stock After Earnings. Here's WhyTarget stock is down big after the retailer missed expectations for its third quarter and slashed its full-year outlook. Here's what Wall Street is saying.
-
For a More Secure Retirement, Build in Some 'Safe Money'To solidify your retirement plan, write it down, reduce your market risk and allocate more safe money into your plan for income.
-
Five Steps to a Mindfully Fearless CareerIf, like many women, you're struggling with imposter syndrome, try developing an athlete's winning mindset. It's as simple as facing one small fear every day.
-
Stock Market Today: Stocks Rally Despite Rising Geopolitical TensionThe main indexes were mixed on Tuesday but closed well off their lows after an early flight to safety.
-
What's at Stake for Alphabet as DOJ Eyes Google's ChromeAlphabet is higher Tuesday even as antitrust officials at the DOJ support forcing Google to sell its popular web browser. Here's what you need to know.
-
Lowe's Stock Is Falling After Earnings. Here's WhyLowe's stock is lower Tuesday as Wall Street weighs a beat-and-raise quarter against declining revenue. This is what you need to know.
