Will Input Costs Weaken Lamb Weston's (LW) Q3 Earnings?
Zacks Investment Research | Mar 25, 2019 08:57AM ET
Lamb Weston Holdings, Inc. (NYSE:LW) is slated to release third-quarter fiscal 2019 results on Apr 2, 2019. This provider of frozen potato products boasts a splendid surprise history. Notably, the company has outperformed earnings and sales estimates since its spin-off from Conagra Brands (NYSE:CAG) . Let’s see how things are shaping up ahead of the quarterly release.
What to Expect?
The Zacks Consensus Estimate for earnings for the impending quarter has been stable in the past 30 days at 82 cents per share. The figure reflects a decline of almost 9.9% from the year-ago quarter’s tally. However, the consensus mark for revenues is pegged at $901 million, reflecting an improvement of nearly 4% from year-ago quarter’s figure.
LTOs & Global Unit: Major Sales Drivers
Lamb Weston is benefitting from limited time offers or LTO innovations for long. Incidentally, LTOs fueled growth and market share gains in fiscal 2018. In the second quarter of fiscal 2019, LTOs contributed significantly to volume growth in the Global segment. Management is positive about further prospects from new LTOs. Also, it expects the new French Fries line to enable the company enter into tie-ups with customers and boost traffic.
Speaking of the Global segment, the unit contributes a major portion to the company’s overall sales and is a key growth catalyst. The segment is gaining from better price/mix and higher volumes. Volumes are being driven by strong sales to consumers in the United States and core international regions as well as gains from LTOs. Price/mix is being fueled by ongoing impacts of pricing actions undertaken in 2018 and favorable mix.
Apart from the Global segment, efficient pricing strategies are fueling performance in the Retail and Foodservice units. Also, the company is focused on making investments to enhance capacity and improve customer services.
We expect the aforementioned factors to positively impact the company’s performance in the upcoming quarterly results.
Lamb Weston Holdings Inc. Price, Consensus and EPS Surprise
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