Stocks in the Spotlight – Lamb Weston Holdings Inc (NYSE:LW)
On Thursday, Shares of Lamb Weston Holdings Inc (NYSE:LW), gained 3.35% to $43.14. During the day, the lowest price at which share is traded was $40.61 and hit the highest price at $43.40. The stock’s institutional ownership stands at 77.60%.
Lamb Weston Holdings, Inc. (LW) declared recently its third quarter 2017 results.
Q3 2017 Commentary:
Net sales were $769.0M, up 5 percent as compared to the year-ago period. Price/mix raised 4 percent because of pricing actions and favorable product and customer mix. Volume raised 1 percent as the Company continued to operate essentially at full capacity.
Income from operations raised 14 percent to $145.0M from the prior year period, and included $5.0M of costs related to the spinoff from Conagra Brands, Inc.. Favorable price/mix mostly drove the increase. On a per pound basis, while raw potato costs were essentially flat as compared to the prior year period, other inputs, manufacturing, transportation and warehousing costs raised, partially offset by supply chain efficiency savings. Selling, general and administrative expense rose, mostly because of incremental costs associated with being a stand-alone public company, in addition to higher incentive compensation costs as a result of the Company’s strong operating performance.
Adjusted EBITDA counting unmerged joint ventures was $191.0M, up 11 percent as compared to the prior year period, mainly reflecting growth in income from operations, partially offset by lower equity method investment earnings because of the impacts of higher raw potato costs in Europe.
Diluted EPS reduced 20 percent to $0.57 from $0.71 in the prior year period, and Adjusted Diluted EPS was $0.59, down 5 percent contrast to the prior year period. The decreases were mostly because of higher interest costs and lower equity method investment earnings. The decrease in Diluted EPS was also because of a $17.70M non-cash gain related to the settlement of a pension plan of the Company’s Lamb-Weston/Meijer joint venture in the prior year quarter.
The effective tax rate was 33 percent in the third quarter of fiscal 2017.
Q3 2017 Segment Highlights:
Net sales for the Global segment raised 3 percent to $392.0M. Price/mix raised 2 percent, mostly reflecting improvement in customer and product mix in addition to price increases. Volume raised 1 percent, driven by growth in both domestic and international markets.
Global Segment Product Contribution Margin raised 9 percent to $93.0M, mainly driven by favorable price/mix.
Net sales for the Foodservice segment raised 10 percent to $242.0M. Price/mix raised 10 percent, reflecting pricing actions in addition to improvement in customer and product mix.
Foodservice Segment Product Contribution Margin raised 30 percent to $84.0M, mostly driven by favorable price/mix.
Net sales for the Retail segment raised 1 percent to $100.0M. Volume raised 1 percent, mainly driven by growth of licensed brands and private label products.
Retail Segment Product Contribution Margin was flat at $23.0M, with higher gross profit offset by raised advertising spending.
Equity Method Investment Earnings:
Equity method investment earnings from unmerged joint ventures were $12.70M, a decrease of $23.40M from the prior year quarter, mostly because of the $17.70M non-cash gain related to the settlement of a pension plan of the Company’s Lamb-Weston/Meijer joint venture in the prior year quarter in addition to the impacts of higher raw potato costs in Europe.
Outlook:
For fiscal 2017, the Company continues to expect net sales to grow at a mid-single digit rate, Adjusted EBITDA counting unmerged joint ventures to grow at a mid-teens rate and Adjusted Diluted EPS of $2.20 to $2.28.
In addition, the Company continues to expect total interest expense to be about $60.0M, and now anticipates its effective tax rate to be 33 to 34 percent. The Company’s previous estimate was about 34 percent.
Technical Analysis:
Lamb Weston Holdings Inc (NYSE:LW), has market value of $6.23 billion while its EPS was booked as $2.17 in the last 12 months. The stock has 146.06 million shares outstanding.
Analyst recommendation for this stock stands at 1.80.