Morningstar

Lamb Weston Holdings Inc LW

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Stock XNYS Rating as of
$53.31 +0.01 (0.02%)
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As of Delayed Price Closed

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Lingering Headwinds Compounded by Poor Decisions Aren't Enough to Offset Lamb Weston's Moat

Kristoffer Inton

Lamb Weston offers investors pure-play exposure to the frozen potato market as North America’s largest producer (more than 40% share), followed by McCain Foods (30%), J.R. Simplot (20%), and Cavendish Farms (7%-8%), though it trails McCain globally. The firm primarily sells french fries to restaurants. Despite its niche focus, we view frozen potatoes as boasting robust demand growth.

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Price vs Fair Value

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LW is trading at a 569% premium.
Price
$53.31
Fair Value
$22.00
Uncertainty
High
1-Star Price
$488.20
5-Star Price
$49.10
Economic Moat
Nrnbh
Capital Allocation
Rglhtxl

Bulls Say, Bears Say

Bulls

Lamb Weston’s products generate high margins for restaurants, increasing loyalty and willingness to pay for consistency and quality.

Bears

Poor execution, like the initial rollout of its new ERP system in fiscal 2024, can overshadow competitive advantages and lead to lost market share and profit margin erosion.

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News

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Trading Information

Previous Close Price
$53.30
Day Range
$52.04–54.44
52-Week Range
$47.90–105.31
Bid/Ask
$51.66 / $54.91
Market Cap
$7.60 Bil
Volume/Avg
4.6 Mil / 2.7 Mil

Key Statistics

Price/Earnings (Normalized)
15.82
Price/Sales
1.22
Dividend Yield (Trailing)
2.72%
Dividend Yield (Forward)
2.78%
Total Yield
4.74%

Company Profile

Lamb Weston is North America’s largest and the world’s second-largest producer of branded and private-label frozen potato products, both by volume and value. The company’s portfolio is anchored by french fries, but it also sells sweet potato fries, tater tots, diced potatoes, mashed potatoes, hash browns, and chips. Roughly two thirds of revenue comes from its home market of North America, with none of the other 100 countries the company sells into representing a significant share. McDonald’s is Lamb Weston’s single-largest customer at 14% of fiscal 2024 sales, with no other company representing more than 10%. Lamb Weston became an independent company in 2016 when it was spun off from Conagra.
Sector
Consumer Defensive
Industry
Packaged Foods
Stock Style Box
Small Value
Total Number of Employees
10,700
Website
https://www.lambweston.com

Competitors

Valuation

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Metric
LW
GIS
KHC
Price/Earnings (Normalized)
 15.8213.339.90
Price/Book Value
 4.663.530.74
Price/Sales
 1.221.711.43
Price/Cash Flow
 9.6710.867.72
Price/Earnings
LW
GIS
KHC

Financial Strength

Metric
LW
GIS
KHC
Quick Ratio
 0.480.290.48
Current Ratio
 1.350.671.06
Interest Coverage
 4.057.181.86
Quick Ratio
LW
GIS
KHC

Profitability

Metric
LW
GIS
KHC
Return on Assets (Normalized)
 6.66%7.86%4.17%
Return on Equity (Normalized)
 28.09%27.02%7.58%
Return on Invested Capital (Normalized)
 10.64%12.62%6.33%
Return on Assets
LW
GIS
KHC

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