Why Is Lamb Weston (LW) Up 16% Since Last Earnings Report?

Core Viewpoint - Lamb Weston reported a decline in both net sales and earnings for Q1 of fiscal 2025, with management cutting its profit outlook amid a slowdown in demand [2][3][9]. Financial Performance - The company's Q1 earnings per share (EPS) was 73 cents, matching estimates but down 55% year over year [3]. - Net sales reached $1,654.1 million, exceeding the Zacks Consensus Estimate of $1,555.2 million, but fell 1% year over year [4]. - Adjusted gross profit decreased by $137.2 million to $353.1 million, influenced by increased manufacturing costs and a $39 million loss from a product withdrawal [5]. Segment Analysis - North America segment net sales dropped 3% to $1,103.7 million, with a 4% decline in volume attributed to customer share losses and reduced restaurant traffic [6]. - International segment net sales increased 4% to $550.4 million, despite a 1% decline in volume, supported by growth in key markets outside Europe [7]. Financial Health - The company ended the quarter with cash and cash equivalents of $120.8 million and long-term debt of $3,437.3 million [8]. - Net cash from operating activities was $330.2 million, with capital expenditures of $335.6 million [8]. Future Outlook - Lamb Weston reaffirmed its fiscal 2025 net sales target of $6.6 billion to $6.8 billion, expecting growth of approximately 2% to 5% [9]. - Adjusted net income target range was lowered to $600-$615 million, with adjusted EPS revised to $4.15-$4.35 [9]. - The company anticipates an interest expense of around $185 million and an effective tax rate of about 25% for the full year [9]. Estimate Trends - There has been a downward trend in estimates, with the consensus estimate shifting down by 10.85% [10][12]. - Lamb Weston currently holds a Zacks Rank 3 (Hold), indicating expectations for an in-line return in the coming months [12]. Investment Scores - The company has a Growth Score of B and a Value Score of A, resulting in an aggregate VGM Score of B [11].