LW
DefensiveLamb Weston
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Market Data
Financials
XBRL · SEC EDGAR2015–2025(11yr)| Metric | FY 2015 | FY 2016 | FY 2017 | FY 2018 | FY 2019 | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 | FY 2025Latest | YoY |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $2.9B | $3.0B | $3.2B | $3.4B | $3.8B | $3.8B | $3.7B | $4.1B | $5.4B | $6.5B | $6.5B | -0.3% |
| Gross Profit | $587.3M | $667.4M | $786.5M | $879.5M | $1.0B | $895.2M | $832.0M | $832.0M | $1.4B | $1.8B | $1.4B | -20.8% |
| Gross Margin | 20.1% | 22.3% | 24.8% | 25.7% | 26.7% | 23.6% | 22.7% | 20.3% | 26.8% | 27.3% | 21.7% | -5.6pp |
| Operating Income | $381.4M | $373.3M | $518.3M | $580.1M | $668.4M | $556.9M | $474.8M | $444.4M | $882.1M | $1.1B | $665.1M | -37.6% |
| Operating Margin | 13.0% | 12.5% | 16.4% | 16.9% | 17.8% | 14.7% | 12.9% | 10.8% | 16.5% | 16.5% | 10.3% | -6.2pp |
| Net Income | $268.3M | $285.3M | $326.9M | $416.8M | $478.6M | $365.9M | $317.8M | $200.9M | $1.0B | $725.5M | $357.2M | -50.8% |
| Net Margin | 9.2% | 9.5% | 10.3% | 12.2% | 12.7% | 9.6% | 8.7% | 4.9% | 18.9% | 11.2% | 5.5% | -5.7pp |
| Free Cash Flow | $239.0M | $230.0M | $159.5M | $174.4M | $346.7M | $406.3M | $406.0M | $128.0M | $107.7M | -$131.3M | $230.1M | +275.2% |
| FCF Margin | 8.2% | 7.7% | 5.0% | 5.1% | 9.2% | 10.7% | 11.1% | 3.1% | 2.0% | -2.0% | 3.6% | +5.6pp |
| EPS (Diluted) | $1.83 | $1.92 | $2.22 | $2.82 | $3.18 | $2.49 | $2.16 | $1.38 | $6.95 | $4.98 | $2.50 | -49.8% |
1. THE BIG PICTURE
Lamb Weston is currently trapped in a "volume-for-price" trade-off, where it must discount its way to growth to protect its status as North America’s top fry supplier. While Lamb Weston is successfully moving more product, its inability to raise prices in a high-cost environment has left it with a massive debt burden and razor-thin margins compared to its food-processing peers.
2. WHERE THE RISKS HIT HARDEST
Lamb Weston’s "long-tenured relationships" with giants like McDonald’s—which accounts for 15% of all sales—are being tested by softening restaurant traffic (10-K Item 1). This concentration risk is aggravated by rising commodity and labor costs; because restaurant traffic is down, Lamb Weston cannot easily use price increases to offset these expenses without risking further volume loss (Risks). Furthermore, Lamb Weston’s "market position" as a global leader is threatened by new production capacity from local competitors in emerging markets like Saudi Arabia and India, which forces Lamb Weston to increase "price and trade investments" to remain competitive (10-K Item 1, 8-K).
3. WHAT THE NUMBERS SAY TOGETHER
The financial data reveals a business running hard just to stay in place. While the most recent quarter showed a 1% uptick in net sales, this was only achieved by offsetting an 8% drop in price/mix with an 8% surge in volume (10-Q). This divergence suggests that the recent growth is not driven by brand strength or innovation, but by aggressive discounting to clear inventory and utilize restarted production lines.
Compared to its peers, Lamb Weston’s efficiency is lagging. Its Free Cash Flow (FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders) margin of 4.8% ranks 5th out of 6 peers, far behind leaders like Kraft Heinz at 13.4% (XBRL). Lamb Weston’s balance sheet is also an outlier; with $3.8 billion in net debt against just $0.3 billion in annual FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders, its 12.2x leverage ratio leaves very little room for error (Computed Valuation). Market sentiment reflects this precariousness, with short interest sitting at a notable 5.7% of the float (Supplemental Signals).
4. IS IT WORTH IT AT THIS PRICE?
At a forward P/EP/EPrice-to-Earnings ratio — share price divided by annual earnings per share; how much investors pay per dollar of profit. Higher P/E = higher growth expectations of 14.8x, Lamb Weston is trading exactly in line with the peer median (XBRL). According to CAPM analysis, this valuation implies the market expects a long-term growth rate of just 0.1%. This is a remarkably low bar, yet it may be justified given that Lamb Weston’s TTMTTMTrailing Twelve Months — the most recent full year of financial data, updated on a rolling basis each quarter revenue growth is currently negative (-0.3%).
For this price to be "right," Lamb Weston must prove it can stabilize its margins. If growth were to accelerate to a modest GDP-pace of 2.5%, the justified multiple would jump to 23.0x (Computed Valuation). However, the immediate reality is a 3.7% net margin that sits well below peers like General Mills (13.5%) or McCormick (11.8%). Given the $4.1 billion debt load and the "restrictive financial covenants" mentioned in the filings, the current "at-par" valuation feels fragile; any further dip in restaurant traffic could make this debt load unsustainable (Risks).
5. WHAT WOULD CHANGE THIS VIEW?
- Constructive if the "price/mix" metric in North America turns positive for two consecutive quarters without collapsing volume growth.
- Cautious if the upcoming negotiations for the 65% of union contracts expiring this year result in work stoppages or wage hikes that further compress operating margins (Risks).
- Cautious if capital expenditures exceed the projected $500 million, further straining the already weak FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders-to-debt ratio.
6. BOTTOM LINE
Structural Advantage: Dominant North American market share and proprietary manufacturing processes (like Stealth Fries) that create high switching costs for major global restaurant chains.
Bottom Line: Lamb Weston is a high-leverage bet on the resilience of the American diner, currently forced to cannibalize its own pricing to defend its territory.
1. Top 5 Material Risks
- Commodity and Input Cost Volatility: Lamb Weston faces rising costs for labor, energy, fuel, packaging, and raw materials (potatoes, edible oil, grains, starches). Lamb Weston cannot guarantee that price increases for its products will successfully offset these expenses, particularly given current soft restaurant traffic.
- Supply Chain Disruptions: Manufacturing, warehousing, and distribution capabilities are vulnerable to extreme weather, climate change, labor shortages, and geopolitical conflicts (e.g., the war in Ukraine). Such disruptions can increase storage costs and weaken Lamb Weston's competitive position.
- Labor Market Pressures: A tight labor market and rising benefit costs—including pension settlement obligations—threaten operating efficiency. With 65% of union-represented hourly employees under contracts expiring or in negotiation within the next twelve months, Lamb Weston faces potential work stoppages or increased wage demands.
- International Operational Risks: With 35% of net sales generated outside the U.S. in fiscal 2025, Lamb Weston is exposed to foreign currency fluctuations, trade barriers, and geopolitical instability. New tariffs or retaliatory measures could adversely affect results, particularly if exemptions for Canadian-sourced inputs are removed.
- Strategic Initiative Execution: Lamb Weston may fail to realize anticipated cost savings from its FY25 Restructuring Plan and the July 2025 Cost Savings Program. Failure to achieve these efficiencies on the expected timeline could hinder Lamb Weston's ability to fund other initiatives.
2. Company-Specific Risks
- Potato Crop Performance: Because ideal growing conditions are geographically concentrated, Lamb Weston is highly sensitive to regional weather events. Poor harvests, such as the 2021 Pacific Northwest heatwave, increase production costs, while oversupply—as seen in fiscal 2025—leads to inventory write-offs.
- ERP System Implementation: The transition to a new ERP system has caused temporary reduced visibility into finished goods inventories and order-filling disruptions. Future phases of the implementation require significant financial and personnel resources and carry the risk of further operational delays.
- Customer Concentration and Power: Large, sophisticated customers and distributors possess the buying power to resist price increases or demand lower pricing. These customers may also shift to private-label alternatives, threatening Lamb Weston’s market share and margins.
- Dependency on Co-packers: Lamb Weston relies on a limited number of high-quality co-packers. If these partners fail to perform or if Lamb Weston cannot secure new agreements on favorable terms, it may be unable to meet customer demand.
3. Regulatory/Legal Risks
- Environmental Compliance: Lamb Weston expects to spend approximately $100 million in fiscal 2026 on environmental projects and $500 million over the next six years to comply with government regulations and permit limitations, particularly regarding wastewater treatment.
- Acrylamide Regulation: Both the FDA and the European Food Safety Authority (EFSA) monitor acrylamide levels in potato products. Stricter global regulatory limits or mandatory consumer warnings (as required in California) could increase manufacturing costs and negatively impact consumer perception.
- Food Safety and Labeling: As a manufacturer of food products, Lamb Weston is subject to strict liability standards under the Food, Drug & Cosmetic Act and the Food Safety Modernization Act. Non-compliance or product recalls—such as the voluntary withdrawal in June 2024—can result in significant fines, litigation, and reputational damage.
4. Financial Impact Map
Commodity Price Volatility → Cost of Goods Sold → Elevated costs for potatoes, edible oil, and energy directly reduce gross margins. Debt Obligations → Cash Flow from Operations → $4.1 billion in debt requires significant interest and principal payments, limiting capital available for reinvestment. Soft Restaurant Traffic/Competition → Net Sales and Profitability → Increased investment in price and trade support to maintain volume reduces net profit. Asset Impairment → Goodwill and Long-Lived Assets → $1,090.2 million in goodwill and $3,687.9 million in property, plant, and equipment are subject to impairment charges if revenue or EBITDAEBITDAEarnings Before Interest, Taxes, Depreciation & Amortization — a rough proxy for operating cash profit, stripping out accounting adjustments growth targets are not met. Pension Settlement → Cash Flow from Operations → The termination of the U.S. pension plan and purchase of group annuity contracts will require cash contributions dependent on plan asset values.
Recent Filings
| Form | Filed | Period |
|---|---|---|
| 8-K | Dec 2025 | — |
| 10-Q | Dec 2025 | Nov 2025 |
| 14A | Aug 2025 | — |
| 10-K | Jul 2025 | May 2025 |
AI-extracted key facts from press releases and SEC filings. Significance 1–10.
Lamb Weston Q3 Net Sales $8B +3%, Raises FY Adjusted EBITDA Guidance to $1.08B–$1.14B
- ▸Net sales +3% to $8B; constant currency sales flat
- ▸Adjusted EBITDA -$101M to $272M due to price mix and $33M potato write-off
- ▸North America volume +12%, International volume -2%
- ▸Raised FY adjusted EBITDA guidance to $1.08B–$1.14B
- ▸Achieved $100M in cost savings year-to-date, ahead of plan
Lamb Weston Q3 Net Sales +3%, Adjusted EBITDA Declines $101M to $272M
- ▸Net sales +3% YoY, volume growth +7% led by 12% North America gain
- ▸Adjusted EBITDA $272M, down $101M due to price/mix and factory costs
- ▸Price/mix declined 7% at constant currency
- ▸FY26 net sales guidance $6.45B–$6.55B; Adjusted EBITDA $1.08B–$1.14B
- ▸Announced closure of Monro Argentina plant and production curtailment in Netherlands
Lamb Weston Q3 Revenue $1.56B Beats Estimates, Adjusted EPS $0.72
- ▸Q3 net sales $1.56B, +3% YoY, beating $1.48B estimate
- ▸Adjusted EPS $0.72, down 37% YoY, beating $0.61 estimate
- ▸Volume growth of 7% offset by 7% decline in price/mix
- ▸North America segment sales +5% to $1.03B, volume +12%
- ▸Adjusted EBITDA fell $101.3M YoY to $271.7M
Lamb Weston Q3 EPS $0.72 beats $0.61 estimate; Revenue $1.56B tops consensus
- ▸Q3 EPS $0.72 vs $0.61 estimate, +18.42% surprise
- ▸Q3 revenue $1.56B, +5.40% above consensus estimates
- ▸Year-ago Q3 EPS was $1.10; year-ago revenue was $1.52B
- ▸Company has beaten consensus EPS and revenue estimates for four consecutive quarters
- ▸FY consensus outlook: $2.83 EPS on $6.52B revenue
Lamb Weston Q3 Revenue $1.56B Beats Estimates by 5.4%, EPS $0.72 Beats by 18%
- ▸Revenue $1.56B, +2.9% YoY, beating estimates of $1.48B
- ▸EPS $0.72, beating consensus estimate of $0.61 by 18.4%
- ▸Consolidated volume +7% vs 3% estimated
- ▸North America volume +12% vs 5% estimated
- ▸Consolidated pricing/mix -7% vs -5.8% estimated
Lamb Weston Q3 Net Sales +3%, Volume +7%, Adjusted EBITDA Falls to $272M
- ▸Q3 net sales +3% YoY, constant-currency sales essentially flat
- ▸Volume +7%, offset by 7% decline in constant-currency price mix
- ▸Adjusted EBITDA $272M, down $101M YoY
- ▸Includes $33M pre-tax charge for excess raw potato write-offs
- ▸North America volume +12%, international volume -2%
Lamb Weston Q1 Revenue $1.56B Beats Estimates, Adjusted EPS $0.72 Tops Consensus
- ▸Q1 revenue $1.56B, +2.9% YoY, beating estimates by 5.2%
- ▸Adjusted EPS $0.72, beating analyst consensus of $0.61 by 17.4%
- ▸Adjusted EBITDA $271.7M, 17.4% margin, beating estimates by 5.4%
- ▸Raised FY revenue guidance midpoint to $6.5B from $6.45B
- ▸Sales volumes increased 7% year-on-year
Lamb Weston Q2 Earnings Beat Estimates Amid Persistent Demand Headwinds and Activist Pressure
- ▸Earnings per share exceeded analyst consensus estimates
- ▸Facing sustained volume declines across key customer segments
- ▸Under pressure from activist investors seeking operational improvements
- ▸Market reaction muted despite bottom-line outperformance
Lamb Weston Q3 Revenue $1.56B, Raises FY26 Sales and EBITDA Outlook
- ▸Q3 net sales $1.56B, up $44.3M YoY
- ▸Volume +7%, offset by 7% decline in price/mix
- ▸Gross profit declined $90.9M to $331.6M
- ▸Raised midpoint of FY26 net sales and EBITDA outlook
- ▸Reduced expected FY26 capital expenditures; declared $0.38/share quarterly dividend
Lamb Weston Q3 EPS $0.39, Net Sales $1.56B +3%, Raises FY26 Outlook
- ▸Q3 Net sales $1.56B, up 3% YoY
- ▸Q3 Diluted EPS $0.39, down 62% YoY
- ▸Q3 Adjusted EBITDA $271.7M, down 27% YoY
- ▸Increased midpoint of FY26 net sales and EBITDA outlook
- ▸Declared quarterly dividend of $0.38 per share