Lamb Weston: Bull / Bear Discussion
Lamb Weston Holdings Inc
Consumer
08/30/2019
Presented
| Date | 08/27/2019 |
| Price | $68.45 |
| Market Cap | $9.97B |
| Ent Value | $11.46B |
| P/E Ratio | 21.55x |
| Book Value | N/A |
| Div Yield | 1.17% |
| Shares O/S | 145.67M |
| Ave Daily Vol | 1,452,987 |
| Short Int | 7.17% |
Current
| Price | $71.31 |
| Market Cap | $10.17B |
| Lamb Weston Holdings, Inc. engages in the production, distribution, and marketing of value-added frozen potato products. It operates through the following business segments: Global, Foodservice, Retail, and Other. The Global segment includes branded and private label frozen potato products sold in North America and international markets. The Foodservice segment comprises branded and private label frozen potato products sold throughout the United States and Canada. The Retail segment consists consumer facing retail branded and private label frozen potato products sold primarily to grocery, mass merchants, club, and specialty retailers. The Other segment compose of vegetable and dairy businesses. The company was founded on July 5, 2016 and is headquartered in Eagle, ID. |
Publicly traded companies mentioned herein: Chipotle Mexican Grill Inc (CMG), Conagra Brands Inc (CAG), Jollibee Foods Corp (JFC PM), Kraft Heinz Co/The (KHC), Lamb Weston Holdings Inc (LW), McDonald’s Corp (MCD), Restaurant Brands International Inc (QSR), Walmart Inc (WMT), Wendy’s Co/The (WEN), YUM! Brands Inc (YUM)
Highlights
On August 27, 2019, DeMatteo Research hosted a bull/bear discussion on Lamb Weston Holdings Inc (LW) and the frozen potato industry. The group shared an extremely wide range of opinions regarding ongoing dynamics (e.g., capacity growth, market demand, pricing trends, etc.) and the outlook for LW. The most bearish presenter expects the company’s share price to fall from its current ~$68 to the $30 range and believes this can occur before the end of CY2019 if guidance is cut further, potentially driven by management’s net pricing outlook turning negative. Another bear has taken note of a change in management’s tone during the Q3 earnings, which has caused him to become more negative. Finally, one participant has yet to establish a position in the stock but has become more bearish, citing the commodity nature of the business and the potential multiple rerating that could occur.
On the other end of the spectrum, the most bullish participant considers the major bear theses mainly qualitative and theoretical, as he has yet to see any reliable data that supports many of the claims (i.e., rumors of recent contract losses, price erosion, etc.). At its current share price, he’s willing to take the other side of the bearish theories and expects the stock to continue to compound at a HSD% – LDD% rate. A moderate bull, meanwhile, notes that he isn’t overly bullish but bought the Q3 dip and is confident the company will be “fine” over the next six months. In that time, he sees an opportunity for guidance beats and multiple expansion.
Industry Growth
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