It has been about a month since the last earnings report for Lamb Weston (LW) . Shares have added about 1.9% in that time frame, underperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Lamb Weston due for a pullback? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent drivers for Lamb Weston before we dive into how investors and analysts have reacted as of late.Lamb Weston’s Q1 Earnings Bea ...

Core Insights - The market began 2025 positively but faced volatility due to tariff and geopolitical risks, with the Fed cutting rates by 25 basis points to 4.00–4.25% in September and signaling two more cuts for the year [1] - Despite inflation and rising unemployment, equities remain near record highs, driven by optimism over rate cuts, AI-driven earnings growth, and hopes for a soft landing [1] - Retail investors face challenges in stock selection amidst these conditions [1] Sales Growth as a Key Metric - Sales growth is preferred over earnings for evaluating stocks, as it reflects actual demand and provides visibility into a company's business model durability [3] - Companies that can grow revenues during economic downturns demonstrate pricing power and competitive advantages [3] - Constant sales growth leads to stronger cash flows, allowing for reinvestment, market expansion, or shareholder returns without excessive debt reliance [5] Stock Selection Criteria - Stocks with 5-Year Historical Sales Growth (%) greater than industry average and Cash Flow over $500 million are prioritized [6] - Additional metrics include P/S Ratio less than industry average, positive % Change in F1 Sales Estimate Revisions, Operating Margin greater than 5%, and Return on Equity (ROE) greater than 5% [7][8][9] Recommended Stocks - **Lamb Weston (LW)**: Expected sales growth rate of 1.3% for fiscal 2026, Zacks Rank 1 [12] - **Universal Health Services (UHS)**: Expected sales growth rate of 8.5% for 2025, Zacks Rank 2 [14] - **FirstEnergy Corp (FE)**: Expected sales growth of 6.6% in 2025, Zacks Rank 2 [14] - **NetEase, Inc. (NTES)**: Expected sales growth of 10.3% for 2025, Zacks Rank 2 [15] - **JPMorgan Chase & Co. (JPM)**: Expected sales growth of 2.1% in 2025, Zacks Rank 2 [16]

Core Insights - Three stocks with strong income characteristics and buy rank are highlighted for investors to consider on October 21 Group 1: Company Performance - Newmont Corporation (NEM) has seen a 6.9% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - Lamb Weston Holdings, Inc. (LW) has experienced a 4.3% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2] - Royal Bank of Canada (RY) has recorded a 5.6% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2] Group 2: Dividend Yield - Newmont Corporation (NEM) offers a dividend yield of 1.1%, which is above the industry average of 0.0% [1] - Lamb Weston Holdings, Inc. (LW) provides a dividend yield of 2.3%, also above the industry average of 0.0% [2] - Royal Bank of Canada (RY) has a dividend yield of 3.1%, matching the industry average of 3.1% [3]

Core Viewpoint - Lamb Weston (LW) shows a favorable earnings outlook, with analysts raising their earnings estimates, which may positively impact the stock price [1][2]. Earnings Estimate Revisions - Analysts' optimism regarding Lamb Weston has led to higher earnings estimates, which historically correlate with stock price movements [2]. - For the current quarter, Lamb Weston is expected to earn $0.68 per share, reflecting a year-over-year increase of +3.0%. The Zacks Consensus Estimate has risen by 12.15% due to three upward revisions and one downward revision in the last 30 days [6]. - For the full year, the expected earnings are $3.14 per share, indicating a year-over-year decrease of -6.3%. However, there has been a positive trend with five upward revisions and no negative revisions in the past month [7]. Zacks Rank - Lamb Weston has achieved a Zacks Rank 2 (Buy), indicating strong agreement among analysts on the positive earnings revisions. This ranking is part of a system that has shown a strong track record of outperformance [3][8]. - Stocks with Zacks Rank 1 (Strong Buy) and 2 (Buy) have historically outperformed the S&P 500 [8]. Stock Performance - The stock has gained 16.8% over the past four weeks, driven by solid estimate revisions, suggesting potential for further growth in earnings [9].

Core Insights - Bragar Eagel & Squire, P.C. is investigating potential claims against Lamb Weston Holdings, Inc. following a class action complaint regarding alleged breaches of fiduciary duties by the company's board of directors during the class period from July 25, 2023, to April 3, 2024 [1][2] Company Overview - Lamb Weston is the largest producer of frozen potato products in North America and the second largest globally, supplying products to restaurants and retailers, including major customer McDonald's [2] ERP System Implementation - On July 25, 2023, Lamb Weston announced the completion of the design phase for a new Enterprise Resource Planning (ERP) software system aimed at improving operational efficiency by managing supplier payments, inventories, warehousing, customer invoicing, and order shipments [2] - The company acknowledged a history of under-investment in information technology, which necessitated the new ERP system [2] Allegations and Financial Impact - The class action complaint alleges that Lamb Weston made material misrepresentations regarding the ERP system's design and implementation, claiming it strengthened operational infrastructure while downplaying issues as "usual bumps" [2] - On April 4, 2024, Lamb Weston reported significant problems with the ERP transition, resulting in over $130 million in lost sales during Q3 2024 and a substantial reduction in sales guidance for the fiscal year by $330 million at the midpoint [2] - The ERP rollout negatively impacted net sales by $135 million, net income by $72 million, and adjusted EBITDA by $95 million, leading to a stock price decline of $19.59 per share, or over 19% [2]

Core Insights - Lamb Weston Holdings, Inc. is advancing its international expansion strategy with a new manufacturing facility in Mar del Plata, Argentina, aimed at meeting the growing demand for frozen potato products in Latin America, especially Brazil and other export-driven markets [1][4] Group 1: Facility Details - The new facility spans 40,000 square meters and has the capacity to process up to 200 million pounds of potatoes annually, producing over 100 varieties of frozen potato products [2] - Approximately 80% of the facility's output is expected to serve export markets, utilizing Mar del Plata's port for efficient distribution [2][8] - The investment is anticipated to create new employment opportunities and contribute to regional development through Lamb Weston's supply network [2] Group 2: Sustainability and Local Partnerships - The facility will collaborate with local suppliers to secure high-quality raw materials and incorporates modern, energy-efficient technology to minimize waste and reduce environmental impact [3] - This project aligns with the company's broader sustainability objectives [3] Group 3: Strategic Implications - The Argentina project reinforces Lamb Weston's strategy to localize operations in high-growth markets while maintaining its leadership in the global frozen potato category [4] - The expansion is expected to enhance regional logistics, improve profitability through cost efficiencies, and strengthen the company's competitive position in Latin America's foodservice sector [4] Group 4: Growth Strategy - Lamb Weston is implementing its Focus to Win strategy to drive profitable growth and deliver long-term shareholder value, emphasizing customer partnerships, executional excellence, innovation, and prioritizing key global markets [5] - The company aims to achieve at least $250 million in annualized run rate savings by the end of fiscal 2028 through a Cost Savings Program [5] Group 5: Market Performance - In the first quarter of fiscal 2026, Lamb Weston experienced a 6% increase in volume, driven by customer wins in North America and Asia, indicating continued market momentum [6] - The stock has risen 10.8% in the past month, contrasting with a 2% decline in the industry [9]

Core Insights - Lamb Weston Holdings, Inc. has officially opened a new production facility in Mar del Plata, Buenos Aires, Argentina, covering an area of 40,000 square meters [1] - This facility is part of a multi-year project aimed at enhancing the company's capacity to meet the growing demand for premium potato products in the Latin American market [1] Company Developments - The new facility is designed to utilize advanced technology to produce frozen potato products, aligning with the company's strategy to serve customer needs effectively [1] - The opening of this facility signifies Lamb Weston's commitment to expanding its footprint in the Latin American region, which is experiencing growth in demand for frozen food products [1] Market Context - The establishment of the production facility is a strategic move to capitalize on the increasing market opportunities in Latin America for premium potato products [1] - This development reflects broader trends in the food industry, where companies are investing in local production capabilities to better serve regional markets [1]

Core Insights - Lamb Weston (LW) has shown a slight increase in total revenue for the quarter ending August 2025, amounting to $1.66 billion, which is a 0.3% year-over-year growth [4] - The company's international operations are significant, contributing 34.6% of total revenue, translating to $574.7 million, which exceeded Wall Street expectations by 3.5% [6] Revenue Breakdown - North America generated $1.08 billion in revenue, accounting for 65.4% of total revenue, slightly down from 66.7% in the same quarter last year [5] - International revenue of $574.7 million represented a growth from $550.4 million in the same quarter last year, indicating a positive trend in foreign market performance [6] Future Projections - Analysts project a total revenue of $1.58 billion for the ongoing fiscal quarter, with North America expected to contribute $1.05 billion and International $538.3 million [7] - For the full fiscal year, total revenue is anticipated to reach $6.5 billion, reflecting a 0.7% increase from the previous year, with North America and International expected to contribute $4.27 billion and $2.23 billion, respectively [8] Market Performance - Lamb Weston's stock has increased by 8.5% over the past month, outperforming the Zacks S&P 500 composite, which rose by 4.3% [13] - Over the past three months, the company's shares gained 22.6%, significantly higher than the S&P 500's 7.4% increase, indicating strong market performance relative to its sector [13]

Group 1 - Lamb Weston Holdings, Inc. is a leading supplier of frozen potato products with a strong market presence and innovative offerings [1][2] - Stifel Nicolaus has set a price target of $63 for Lamb Weston, indicating a modest potential upside of 1.6% from the current trading price of $62.01 [1][5] - The company reaffirmed its guidance, highlighting a positive outlook for cash flow and capital returns, supported by substantial dividend payments and aggressive share buybacks [2][5] Group 2 - The stock currently yields 2.5%, with a payout ratio of about 60% relative to earnings, which is manageable and aligns with industry standards [3][5] - The cash flow payout ratio was only 17% in Q1, suggesting sustainability in its double-digit distribution compound annual growth rate (CAGR) [3][5] - Lamb Weston's stock price has increased approximately 6.77%, reaching $62.01, with a market capitalization of about $8.64 billion [4][5]

Core Viewpoint - Lamb Weston reaffirms its guidance, indicating a solid cash flow and capital return outlook, with potential for double-digit total returns for long-term investors [1] Financial Performance - In FQ1, Lamb Weston reported revenue of $1.66 billion, a growth of approximately 0.5%, driven by a 6% volume increase and a 1% positive impact from foreign exchange translation, despite a 7% decline in price [5] - The company experienced margin pressure across comparisons, but the declines were less than expected, with GAAP earnings of 74 cents exceeding MarketBeat's consensus by 21 cents [8] Dividend and Share Buybacks - The company offers a dividend yield of 2.39%, with a payout ratio of about 60%, which is manageable and aligned with industry standards; the cash flow payout ratio was only 17% in Q1, suggesting sustainability of double-digit distribution CAGR [2] - Lamb Weston reduced its share count by 2% in F2025 and is on track for similar reductions in F2026, with a pace exceeding 3.5% in FQ1 [3] Balance Sheet Health - The balance sheet shows no red flags, with reduced assets offset by a decrease in liabilities, low leverage, and improved equity despite a decrease in share count [4] Market Outlook - Analysts have a tepid sentiment towards Lamb Weston, with a Hold rating and a price target of $65.56, indicating a potential upside of 5.9% [6][10] - Institutional ownership is strong at about 90%, providing a solid support base, with institutions likely to continue buying due to the stock's low value [11]