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On Wednesday, Citi reaffirmed its Buy rating on shares of Lamb Weston (NYSE:LW) with a steady price target of $104.00. The firm anticipates the company to release its fiscal fourth-quarter 2024 results on July 24, with expectations for sales and earnings per share (EPS) to align with the current consensus. However, Citi projects a conservative fiscal year 2025 outlook for Lamb Weston, with sales and EPS estimates below the consensus.
According to Citi, Lamb Weston has a history of providing cautious guidance, suggesting that initial fiscal year 2025 projections may factor in a gradual volume recovery and a significant year-over-year increase in depreciation and amortization (D&A). This conservative stance is not expected to come as a surprise to investors, which might shield the stock from potential price drops if analyst estimates adjust downward following the earnings report.
The firm's outlook for Lamb Weston post-earnings is optimistic, considering that once the fiscal year 2025 guidance is established, the stock could become more appealing. Citi believes that the potential for a volume rebound and an expansion in the stock's multiple present a favorable scenario for Lamb Weston's shares moving forward.
In other recent news, Lamb Weston has been the focus of analysts' projections and market performance reviews. TD Cowen maintained its Buy rating on shares of Lamb Weston, keeping the price target at $105.00, despite anticipating a potential fourth-quarter sales shortfall due to declining foot traffic at key national burger and chicken chain customers. This trend has led to a cautious outlook for fiscal year 2025.
The company's earnings and revenue have been impacted by a downward revision of around 5% in EBITDA estimates for FY25, mainly due to slowing restaurant traffic and customer losses related to the implementation of an Enterprise Resource Planning (ERP) system. However, analysts project EPS forecasts of 5.48 for FY1 and 6.54 for FY2, indicating expectations of solid earnings growth.
Lamb Weston has also experienced operational setbacks from the ERP transition but anticipates improved operational efficiency upon successful completion. Analysts from Barclays Capital Inc. have consistently given the company an "Overweight" rating, expressing confidence in its potential to outperform the broader market. With these recent developments, Lamb Weston continues to navigate both opportunities and challenges in the food processing industry.
InvestingPro Insights
As Lamb Weston (NYSE:LW) approaches its earnings report, the latest data from InvestingPro underscores key financial metrics that investors may find valuable. With a market capitalization of $11.25 billion and a P/E ratio of 10.34, Lamb Weston trades at a low earnings multiple relative to its near-term earnings growth. The company's revenue has shown impressive growth over the last twelve months as of Q3 2024, with a 36.22% increase, highlighting its strong performance in the market.
InvestingPro Tips suggest that Lamb Weston has a track record of raising its dividend for 7 consecutive years, which is indicative of its commitment to shareholder returns. Additionally, analysts anticipate sales growth in the current year, which could be a positive sign for potential investors. For those looking to delve deeper into Lamb Weston's financials and future prospects, InvestingPro offers further analysis and tips. By using the coupon code PRONEWS24, readers can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, gaining access to the full suite of InvestingPro Tips. Currently, there are 11 additional tips available on InvestingPro for Lamb Weston, providing a more comprehensive understanding of the company's financial health and stock performance.
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