Lamb Weston (LW)
Consumer · NYSE · US
Fundamentals
Valuation and ratings
Lamb Weston trades at $46.92, which is 60% above the $18.58 our discounted cash flow model puts on the business. On that measure it screens as expensive, which is not the same as saying it will fall.
Our moat model scores it 30 out of 100, which is little in the way of a moat. A moat is a structural reason competitors cannot take the profits away, and it matters more to a long holding period than any single quarter's numbers do.
It changes hands at 21.8 times earnings. Be careful reading that in isolation: for a cyclical business a low P/E arrives at the top of the cycle, when profits are peaking and about to fall, which is exactly when the shares look cheapest and are not.
About Lamb Weston
Lamb Weston Holdings, Inc. engages in the production, distribution, and marketing of frozen potato products in the United States, Canada, Mexico, and internationally. It offers frozen potatoes, commercial ingredients, and appetizers under the Lamb Weston brand, as well as under various customer labels. The company also provides its products under its owned or licensed brands, such as Grown in Idaho and Alexia, and other licensed brands, as well as under retailers' own brands. It sells its products through a network of internal sales personnel and independent brokers, agents, and distributors to quick service and full-service restaurants and chains, wholesale, grocery, mass merchants, club retailers, and specialty retailers, as well as foodservice distributors and institutions, including businesses, educational institutions, independent restaurants, regional chain restaurants, and convenience stores. Lamb Weston Holdings, Inc. was incorporated in 1950 and is headquartered in Eagle, Idaho.
LW passes 2 of our 30 screens today
Each screen prints the exact criteria it used, and the circumstances in which it is wrong.
Smart money ownership
11 of the funds we track reported a position in their latest SEC 13F filing. Largest first:
- Jeff Smith, Starboard Value LP$258.42M · 5.7% of book
- Cliff Asness, AQR CAPITAL MANAGEMENT LLC$85.74M · 0.0% of book
- Arrowstreet Capital, ARROWSTREET CAPITAL, LIMITED PARTNERSHIP$61.36M · 0.0% of book
- Joel Greenblatt, Gotham Asset Management, LLC$17.50M · 0.1% of book
- Marshall Wace, MARSHALL WACE, LLP$11.55M · 0.0% of book
A word of warning on reading these figures: a 13F reports the market value of a holding, so a fund that traded nothing at all still appears to have sold when the price fell. We found 102 companies where the standard reading gives the opposite answer. Only the share count is honest.
Common questions
Is Lamb Weston (LW) undervalued?
Against our discounted cash flow estimate of $18.58, LW at $46.92 is 60% above fair value. That is one model's answer, not a recommendation, and most of a DCF's output sits in a terminal value nobody can forecast.
Which funds own LW?
11 of the institutions we track reported a position in LW in their most recent SEC 13F filing. A 13F is filed up to 45 days after quarter end, so it tells you what a fund held then, not what it holds now.
What is LW's P/E ratio?
LW trades at 21.8 times earnings. A low P/E is not automatically cheap: on a cyclical company it is usually a warning that earnings are at a peak.
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Data from company filings, exchange quotes and SEC EDGAR 13F disclosures. Quotes are delayed. Metrics we do not have are left out rather than estimated. Educational information, not financial advice.