Why Frozen Potato Products Supplier Lamb Weston's Shares Are Jumping Today?

Frozen potato products supplier Lamb Weston Holdings Inc LW reported first-quarter FY24 sales growth of 48% year-on-year to $1.67 billion, beating the analyst consensus estimate of $1.62 billion.

Volume declined 8%, primarily reflecting the company's decisions to exit certain lower-priced and lower-margin business as it continues to strategically manage customer and product mix.

Gross profit increased 82.7% Y/Y to $499.5 million, and the gross margin expanded 570 basis points to 30%.

The operating margin was 19.4%, and operating income for the quarter jumped 106% to $323 million.

Adjusted EPS of $1.63 beat the analyst consensus of $1.08.

Lamb Weston held $163.3 million in cash and equivalents as of August 27, 2023. Net cash from operating activities totaled $334.6 million.

"We continue to expect the potato crop in our growing regions in North America will be in line with historical averages, and we believe the overall crop in Europe has improved compared to earlier predictions as a result of better growing conditions," said CEO Tom Werner.

In Q1, Lamb Weston returned $40.8 million to shareholders through cash dividends and $100.0 million through share repurchases. The company has about $124 million remaining under its existing share repurchase program.

Outlook: Lamb Weston currently sees FY24 Adjusted EPS of $5.50-$5.95 versus the consensus of $5.35. The company had earlier estimated EPS of $4.95-$5.40.

LW raised the FY24 sales outlook to $6.8 billion - $7 billion from $6.7 billion - $6.9 billion, against the consensus of $6.83 billion.

Price Action: LW shares are trading higher by 12.29% at $101,61 on the last check Thursday.