LW

Lamb Weston Holdings Inc

Consumer, Event Driven/Special Sit


Presented:05/25/2017
Price:$45.63
Cap:$6.68B
Current Price:$71.31
Cap:$10.17B

Presented

Date05/25/2017
Price$45.63
Market Cap$6.68B
Ent Value$8.32B
P/E RatioN/A
Book ValueN/A
Div Yield1.64%
Shares O/S146.50M
Ave Daily Vol1,108,651
Short Int1.03%

Current

Price$71.31
Market Cap$10.17B
Lamb Weston Holdings, Inc. produce, provides, and markets value-added frozen potato products. It operates through the following segments: Global, Foodservice, Retail, and Other. The Global segment includes sales to retail and foodservice customers outside the United States and Canada and the results of operations associated with Lamb Weston's business with very large chain restaurant customers, whether those results are generated in the United States or abroad. The Foodservice segment covers sales to broad line foodservice distribution customers in the United States and Canada. The Retail segment comprised of sales to grocery, mass, club, and specialty retailers primarily in the United States. The Other segment comprises consolidated results of operations from Lamb Weston's frozen vegetable business and dairy business and equity method earnings from Lamb Weston's unconsolidated joint ventures, Lamb Weston Meijer and Lamb Weston RDO. The company was founded on July 5, 2016 and is headquartered in Chicago, IL.

Publicly traded companies mentioned herein: Conagra Brands Inc (CAG), Lamb Weston Holdings Inc (LW), McDonald’s Corporation (MCD), Restaurant Brands International Inc (QSR), Sysco Corporation (SYY), Yum Brands Inc (YUM)

Highlights

Lamb Weston (LW) was spun-out of Conagra in early November 2016. The presenter is long the stock at ~$45 and believes it to be undervalued. In his opinion, many investors and analysts on the Street view its business - frozen potato processing - as a commodity business. This misperception leads to an underappreciation of 1) where the cycle is today (and how strong it is); 2) LW’s dominant position in the US market and a growing global category; and 3) the company’s future earnings power. If his forecasts are accurate, LW stands to benefit from being a first-mover on capacity expansion, within the investment horizon, and the company could earn $3.50 per share over calendar 2018, which is over 20% ahead of Street expectations. At 17x, the implied fair value is $60 (33% upside).

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Idea Discussion

Commentor 1 - 2 weeks ago

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