Lamb Weston Stock Jumps 10% as Jana Partners Acquires Strategic Stake
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Shares of Lamb Weston Holdings, Inc. LW jumped 10.2% on Friday, as sources revealed that Jana Partners acquired a 5% stake in the frozen potato product maker, and may drive the company to consider strategic alternatives.This came soon after Lamb Weston announced a restructuring plan and its first-quarter fiscal 2025 results earlier this month, wherein the top and bottom lines declined year over year. At the earnings release, management also curtailed its adjusted earnings per share (EPS) guidance for the fiscal, reflecting ongoing challenges in its core markets.Lamb Weston’s Key ChallengesAt its first-quarter fiscal 2025 earnings call, management noted that restaurant traffic and frozen potato demand remain soft compared with supply. According to data from restaurant industry providers, Lamb Weston observed a slowdown in restaurant traffic during the first quarter. U.S. restaurant traffic, including the key quick-service restaurant (QSR) sector, declined by 2% year over year, with QSR chains specializing in hamburgers seeing a nearly 3% drop, impacting fry consumption.Outside the United States, key international markets also experienced softer traffic in the first quarter compared with the preceding quarter. Lamb Weston expects this supply-demand imbalance, driven by declining traffic, to persist through much of fiscal 2025. Apart from this, the company is grappling with high costs.The company anticipates achieving the low end of its adjusted EBITDA target range of $1,380 million to $1,480 million. Higher manufacturing costs per pound, net of restructuring savings, a less favorable product mix, and slightly higher-than-expected investments in pricing and trade are expected to offset reductions in adjusted SG&A expenses. Lamb Weston lowered its adjusted net income target range to $600-$615 million and adjusted EPS to $4.15-$4.35, reflecting a reduced adjusted EBITDA guidance range. Previously, the company projected adjusted net income of $630 million to $705 million and adjusted EPS of $4.35 to $4.85 for fiscal 2025.Image Source: Zacks Investment ResearchLamb Weston Implements Restructuring PlanLamb Weston rolled out a Restructuring Plan aimed at enhancing operating efficiency, profitability and cash flow while positioning the company to make strategic investments that support its customers and drive long-term value for stakeholders. Keeping along these lines, the company has permanently closed its Connell, WA facility, one of its older and higher-cost plants, reducing its North American production capacity by over 5%.In addition, Lamb Weston is temporarily curtailing production lines and schedules across its North American manufacturing network to focus on more efficient, lower-cost operations and reduce elevated finished goods inventory. The company is also reshaping future investments to modernize production capabilities, aiming to optimize capacity and reduce capital expenditures. As part of this plan, Lamb Weston is reducing its global headcount by approximately 4% and eliminating certain unfilled positions.These actions are designed to enhance operational efficiency and better manage utilization rates across its manufacturing network. The company expects the restructuring plan to generate around $55 million in pre-tax cost savings and reduce working capital in fiscal 2025. Lamb Weston anticipates additional benefits in fiscal 2026, with projected annualized savings of approximately $85 million.Final Thoughts on LWLamb Weston is navigating a complex landscape of declining demand, rising costs and industry-specific challenges. While the restructuring plan offers a pathway to improved efficiency and profitability, the company's near-term outlook remains clouded by sluggish restaurant traffic and ongoing cost pressures. Jana Partners’ stake in Lamb Weston may spur further strategic shifts, but the company’s success will depend on its ability to manage these headwinds effectively.The Zacks Rank #4 (Sell) stock is down 1.4% in the past three months, against the industry’s growth of 6.4%.Three Staple Stocks to ConsiderFreshpet FRPT manufactures, distributes and markets natural fresh meals and treats for dogs and cats. It currently carries a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for FRPT’s current financial-year sales and earnings indicates advancements of 26.1% and 202.9%, respectively, from the prior-year figures. It has a trailing four-quarter earnings surprise of 132.9%, on average.Flowers Foods FLO, one of the largest producers of packaged bakery foods in the United States, currently carries a Zacks Rank #2 (Buy). FLO has a trailing four-quarter earnings surprise of 1.9%, on average.The Zacks Consensus Estimate for Flowers Foods’ current financial-year sales and earnings implies growth of around 1% and 5%, respectively, from the year-ago reported numbers.McCormick & Company, Inc. MKC is a leading manufacturer, marketer and distributor of spices, seasonings, specialty foods and flavors. It currently carries a Zacks Rank #2.The Zacks Consensus Estimate for McCormick & Company’s current fiscal-year sales and earnings indicates advancements of 0.6% and 8.2%, respectively, from the year-ago reported figures. MKC has a trailing four-quarter earnings surprise of 13.8%, on average.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Freshpet, Inc. (FRPT): Free Stock Analysis Report McCormick & Company, Incorporated (MKC): Free Stock Analysis Report Flowers Foods, Inc. (FLO): Free Stock Analysis Report Lamb Weston (LW): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks
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Nachrichten zu Lamb Weston Holdings Inc Registered Shs When Issued
Analysen zu Lamb Weston Holdings Inc Registered Shs When Issued
Datum | Rating | Analyst | |
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22.01.2018 | Lamb Weston Hold | Stifel, Nicolaus & Co., Inc. | |
02.01.2018 | Lamb Weston Hold | Stifel, Nicolaus & Co., Inc. | |
07.04.2017 | Lamb Weston Hold | Stifel, Nicolaus & Co., Inc. | |
11.11.2016 | Lamb Weston Buy | Stifel, Nicolaus & Co., Inc. |
Datum | Rating | Analyst | |
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22.01.2018 | Lamb Weston Hold | Stifel, Nicolaus & Co., Inc. | |
02.01.2018 | Lamb Weston Hold | Stifel, Nicolaus & Co., Inc. | |
07.04.2017 | Lamb Weston Hold | Stifel, Nicolaus & Co., Inc. | |
11.11.2016 | Lamb Weston Buy | Stifel, Nicolaus & Co., Inc. |
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