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Lamb Weston jumps after raising fiscal 2023 forecast, earnings top expectations

Published 06/01/2023, 05:19 am
Updated 06/01/2023, 05:19 am
© Reuters

© Reuters

By Sam Boughedda

Lamb Weston Holdings Inc (NYSE:LW) shares jumped 9% Thursday on the back of its fiscal second-quarter earnings release, which saw it top consensus estimates for profit and revenue.

The company's results were boosted by a 30% rise in price/mix, reflecting the benefit of product and freight pricing actions which countered input, manufacturing, and transportation cost inflation.

Revenue for the quarter came in at $1.28 billion versus the consensus estimate of $1.15B, while the company's earnings per share were $1.28, $0.54 better than the analyst estimate of $0.74.

The company did, however, state that the impact of supply chain disruptions during the quarter continued to affect production run-rates and throughput in its production facilities, as well as customer order fulfillment rates.

Even so, Lamb Weston raised its fiscal 2023 forecast. Net sales are expected to be $4.8B to $4.9B, versus the consensus of $4.73B. They previously expected net income to be between $4.7B and $4.8B.

In addition, Lamb Weston sees EPS for the period between $3.75 and $4.00, versus the consensus of $2.98, and up from previous expectations of $2.45 to $2.85.

Lamb Weston shares are up more than 9% Thursday.

Reacting to the report, Stifel analyst Christopher Growe said: "This performance was well ahead of our estimate and surprising given the weak potato crop from last year (fully utilized now), the success of the pricing, and the implications for recovering its gross margin starting in 2H23."

"The company pretty radically increased its outlook for the business led by a much stronger gross margin outlook (up to 27%-28%) in 2H23. EBITDA is now expected to push up to $1.1B ($910 million previously)."

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