Lamb Weston (NYSE:LW) Shares Gap Up After Better-Than-Expected Earnings

Key Points

• Lamb Weston shares jumped after earnings beat expectations. Adjusted EPS came in at $0.75 versus the $0.59 consensus, while revenue reached $1.67 billion, slightly above estimates.
• Management raised or reaffirmed a favorable fiscal 2027 outlook, including projected EPS of $3.05–$3.35, low-single-digit sales growth, and adjusted EBITDA of $1.125–$1.215 billion. North American demand and cost savings helped offset weaker international sales.
• Underlying results remained mixed and analysts stayed cautious. Net income, reported EPS, international sales, and operating cash flow declined, while the analyst consensus remained “Hold” with an average price target of $52.45; the company also declared a quarterly dividend of $0.38 per share.

Lamb Weston (NYSE:LW - Get Free Report)'s stock price gapped up before the market opened on Tuesday after the company announced better than expected quarterly earnings. The stock had previously closed at $44.57, but opened at $47.03. Lamb Weston shares last traded at $48.9630, with a volume of 1,287,850 shares traded.

The specialty retailer reported $0.75 earnings per share (EPS) for the quarter, topping analysts' consensus estimates of $0.59 by $0.16. The company had revenue of $1.67 billion for the quarter, compared to analyst estimates of $1.65 billion. Lamb Weston had a net margin of 4.39% and a return on equity of 23.33%. The business's revenue for the quarter was up .7% compared to the same quarter last year. During the same period in the prior year, the firm earned $0.74 earnings per share. Lamb Weston has set its FY 2027 guidance at 3.050-3.350 EPS.

Lamb Weston Dividend Announcement

The firm also recently declared a quarterly dividend, which was paid on Friday, September 4th. Shareholders of record on Friday, August 7th were paid a $0.38 dividend. The ex-dividend date was Friday, August 7th. This represents a $1.52 dividend on an annualized basis and a yield of 3.1%. Lamb Weston's dividend payout ratio (DPR) is currently 73.08%.

Key Headlines Impacting Lamb Weston

Here are the key news stories impacting Lamb Weston this week:

• Positive Sentiment: Adjusted earnings and sales topped estimates. Lamb Weston reported adjusted EPS of $0.75, above the $0.59 analyst consensus, while revenue reached $1.67 billion versus expectations of $1.65 billion. Revenue increased roughly 1% year over year. Lamb Weston quarterly earnings press release
• Positive Sentiment: Fiscal 2027 targets were raised. Management now expects low-single-digit sales growth and adjusted EBITDA of $1.125 billion to $1.215 billion. Reported EPS guidance is $3.05 to $3.35, above the approximately $3.02 consensus estimate. Lamb Weston lifts fiscal 2027 outlook
• Positive Sentiment: North American demand remained a bright spot. North America sales rose 5.2% to $1.14 billion, helping offset weaker international sales. Investors also responded favorably to management’s cost-savings initiatives, which are supporting earnings performance. Lamb Weston earnings and cost savings
• Positive Sentiment: Shareholder returns and insider activity offered additional support. The board declared a quarterly dividend of $0.38 per share, while disclosed insider activity showed purchases and no sales during the past six months.
• Neutral Sentiment: Analyst sentiment remains constructive but cautious. Wells Fargo maintained an “overweight” rating while lowering its price target from $57 to $54, still implying meaningful potential upside from the referenced trading level.
• Negative Sentiment: Underlying financial trends were mixed. Net income fell to $29.1 million from $64.3 million, reported EPS declined to $0.21 from $0.46, international sales decreased 8%, and operating cash flow dropped to $234.8 million from $352 million.

Analysts Set New Price Targets

Several analysts have recently weighed in on the stock. TD Cowen boosted their price objective on shares of Lamb Weston from $40.00 to $52.00 and gave the stock a "hold" rating in a research report on Tuesday, July 28th. Wells Fargo & Company cut their price target on shares of Lamb Weston from $57.00 to $54.00 and set an "overweight" rating on the stock in a research note on Monday. Wall Street Zen downgraded shares of Lamb Weston from a "buy" rating to a "hold" rating in a research note on Saturday. JPMorgan Chase & Co. dropped their price objective on Lamb Weston from $52.00 to $46.00 and set a "neutral" rating on the stock in a report on Wednesday, September 30th. Finally, Stifel Nicolaus lifted their target price on Lamb Weston from $45.00 to $52.00 and gave the stock a "hold" rating in a research report on Monday, July 27th. Three research analysts have rated the stock with a Buy rating and ten have issued a Hold rating to the stock. According to MarketBeat.com, the company has a consensus rating of "Hold" and an average target price of $52.45.

Institutional Inflows and Outflows

Several institutional investors and hedge funds have recently added to or reduced their stakes in the stock. BlackRock Inc. acquired a new stake in Lamb Weston in the 2nd quarter valued at about $730,276,000. JANA Partners Management LP grew its position in shares of Lamb Weston by 7.7% in the second quarter. JANA Partners Management LP now owns 5,394,635 shares of the specialty retailer's stock valued at $232,940,000 after purchasing an additional 386,000 shares during the last quarter. State Street Corp increased its stake in shares of Lamb Weston by 6.4% during the 2nd quarter. State Street Corp now owns 4,869,644 shares of the specialty retailer's stock worth $210,271,000 after purchasing an additional 294,120 shares in the last quarter. Capital Research Global Investors increased its stake in shares of Lamb Weston by 31.2% during the 4th quarter. Capital Research Global Investors now owns 2,820,000 shares of the specialty retailer's stock worth $118,130,000 after purchasing an additional 670,000 shares in the last quarter. Finally, Dimensional Fund Advisors LP raised its position in shares of Lamb Weston by 28.1% during the 1st quarter. Dimensional Fund Advisors LP now owns 2,742,208 shares of the specialty retailer's stock worth $115,865,000 after purchasing an additional 601,171 shares during the last quarter. 89.56% of the stock is currently owned by institutional investors and hedge funds.

Lamb Weston Price Performance

The company has a debt-to-equity ratio of 1.97, a quick ratio of 0.74 and a current ratio of 1.42. The company has a 50-day moving average of $50.13 and a 200-day moving average of $45.96. The stock has a market capitalization of $6.73 billion, a price-to-earnings ratio of 23.68, a P/E/G ratio of 1.94 and a beta of 0.49.

About Lamb Weston

Lamb Weston Holdings, Inc NYSE: LW is a global producer and marketer of frozen potato products. The company supplies French fries, potato wedges, hash browns, potato rounds, mashed potatoes and other specialty potato products to restaurants, foodservice distributors, retailers and food manufacturers.

Its product portfolio includes conventional and specialty frozen potato offerings, as well as sweet potato products and appetizer items. Lamb Weston sells products under its Lamb Weston and Grown in Idaho brands, while also providing private-label products for retail and foodservice customers.

The company's history dates to the 1950s, when it began producing frozen potato products in the Pacific Northwest.

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