Key Takeaways
- Lamb Weston shares rose 12% after first-quarter adjusted EPS of $0.75 beat its own guidance and the company raised its full-year outlook.
- North America is carrying the company: volume rose 7% for a seventh straight quarter, and segment adjusted EBITDA rose 11%.
- International segment adjusted EBITDA fell 54% on lower sales in Europe and costly potatoes carried in from last year’s crop.
- The new adjusted EPS outlook of $3.05 to $3.35 is above analysts’ $3.01 consensus but well below the $5.08 Lamb Weston earned in fiscal 2024.
Lamb Weston (LW) shares jumped 12% today after the french fry supplier reported fiscal first-quarter results before the open and raised its outlook for the year.
“We are off to a solid start to the year, delivering first quarter net sales and profit above our expectations,” said Mike Smith, Lamb Weston’s president and CEO.
And the numbers back him up…
What exactly happened
- Net sales rose 1% to $1.67 billion.
- Adjusted EPS came in at $0.75. According to Zacks, analysts expected $0.59.
- Adjusted EBITDA fell 5% to $286 million.
- Full-year adjusted EPS guidance rose to $3.05 to $3.35, from $2.95 to $3.25.
- Full-year adjusted EBITDA guidance rose to $1.125 billion to $1.215 billion, from $1.10 billion to $1.20 billion.
North America did the heavy lifting. Volume there grew 7%, its seventh straight quarter of growth, thanks to more orders from existing customers and new customer wins. Segment adjusted EBITDA rose 11% to $287 million, helped by cost savings and $5 million in tariff refunds.
Europe is another story. International sales fell 8%, and segment adjusted EBITDA dropped 54% to $27 million. The drop came from lower sales in Europe, underused factories, and potatoes still carrying last year’s higher costs. Smith said the region “continues to face challenging market conditions.”
Price is the other weak spot. Price/mix fell 2% in both segments. Smith also flagged “unexpected inflationary pressure across key input costs and freight expense.”
Here’s the thing: fuller plants are making up for it. Utilization in North America is up about 10 percentage points, and the company now expects to “overdeliver” on its cost savings program.
Still a recovery
Even the raised outlook leaves earnings well below where the business was as recently as 2024.
The whole new range is above the $3.01 analysts expected for fiscal 2027 (the year to May 2027), so expect those estimates to move up.
And the stock still looks cheap against its own history. Before Tuesday, it traded at 14.8 times forward earnings, against a five-year average of 20.1x…
Even after the jump, still well under the average.
I think the raise is believable, because it rests on things Lamb Weston controls: customer wins, fuller plants and cost savings. Of course, Europe hasn’t turned around yet, and management won’t lay out its full plan until its Investor Day in early 2027.
So what is Lamb Weston stock actually worth?
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Disclaimer:
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