Lamb Weston Holdings Inc (LW, Financial) has experienced a notable fluctuation in its stock price recently. With a current market capitalization of $15.91 billion, the company's shares are trading at $109.75. Over the past week, the stock has seen a 2.40% decline, yet when looking at the broader picture over the past three months, there has been an impressive 17.46% gain. According to GuruFocus's valuation metrics, the GF Value of Lamb Weston stands at $125.39, up from a past GF Value of $114.19, indicating that the stock is currently modestly undervalued, a consistent assessment from the past valuation.
Introduction to Lamb Weston Holdings
Lamb Weston Holdings Inc, a prominent player in the Consumer Packaged Goods industry, is North America's largest and the world's second-largest producer of branded and private-label frozen potato products. The company's diverse product range includes French fries, sweet potato fries, tater tots, and more. With 70% of its revenue generated from North America, Lamb Weston maintains a strong market presence. McDonald's, accounting for 13% of fiscal 2023 sales, is its largest customer. Since its spin-off from Conagra in 2016, Lamb Weston has operated independently.
Assessing Profitability
Lamb Weston's Profitability Rank is a robust 8 out of 10, reflecting its strong position within the industry. The company's Operating Margin is an impressive 17.80%, surpassing 90.28% of 1,842 companies in the same realm. Its Return on Equity (ROE) is a staggering 107.36%, and Return on Assets (ROA) stands at 18.65%, both metrics outperforming the majority of their peers. Additionally, Lamb Weston's Return on Invested Capital (ROIC) is 18.81%, indicating efficient capital utilization. The company has maintained profitability for the past decade, a testament to its financial resilience and operational efficiency.
Growth Trajectory of Lamb Weston
The Growth Rank for Lamb Weston is 7 out of 10, showcasing its solid growth prospects. The company's 3-Year Revenue Growth Rate per Share is 12.60%, and its 5-Year Revenue Growth Rate per Share is 7.60%. Looking ahead, the Total Revenue Growth Rate (Future 3Y To 5Y Est) is projected at 13.24%. In terms of earnings, the 3-Year EPS without NRI Growth Rate is 23.20%, while the 5-Year rate is more modest at 3.30%. The EPS Growth Rate (Future 3Y To 5Y Est) is estimated at 3.29%, reflecting steady future earnings potential.
Notable Shareholders in Lamb Weston
Among the notable investors in Lamb Weston, Stanley Druckenmiller (Trades, Portfolio) holds the lead with 1,826,090 shares, representing 1.26% of the company. Following him is Steven Cohen (Trades, Portfolio) with 1,478,876 shares, accounting for 1.02%, and Ray Dalio (Trades, Portfolio) with 493,597 shares, making up 0.34% of the company's shares.
Competitive Landscape
Lamb Weston operates in a competitive landscape, with key players such as Conagra Brands Inc (CAG, Financial) with a market cap of $13.67 billion, Campbell Soup Co (CPB, Financial) valued at $13.25 billion, and JM Smucker Co (SJM, Financial) with a market cap of $13.71 billion. These companies, along with Lamb Weston, form a closely contested segment within the Consumer Packaged Goods industry.
Conclusion
In conclusion, Lamb Weston Holdings Inc's stock performance has been impressive over the past three months, with a 17.46% gain despite a recent weekly dip. The company's strong profitability metrics, consistent growth, and strategic market position contribute to its current valuation as modestly undervalued. With a solid profitability rank and promising growth rates, Lamb Weston is well-positioned within its industry, holding its own against competitors. The company's stock performance, backed by its financial health and growth prospects, makes it an interesting consideration for value investors.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
