Lamb Weston Earnings: Shares Remain Undervalued After Solid Second Fiscal Quarter With Few Surprises

After digesting narrow-moat Lamb Weston’s fiscal second-quarter earnings that had few surprises, we expect to raise our fair value estimate of $117 per share by a low-single-digit percentage, mostly due to the time value of money. Since reaching a nadir after the company’s analyst day in October, shares have rallied more than 25%, outperforming the Morningstar U.S. Market Index return of 10% over the same period. But we think shares still offer attractive risk-adjusted upside on top of a quarterly dividend payment that was increased 29% last month (1.4% forward yield).