Lamb Weston Holdings, Inc. (LW) stock analysis

P/E above its 5-year median

Lamb Weston's P/E of 30.9 is above its own 5-year median of 30.3.

P/E above the industry

Lamb Weston's P/E of 30.9 is above the Food and Kindred Products median of 21.0.

EV/EBITDA below its 5-year median

Lamb Weston's EV/EBITDA of 12.6 is below its 5-year median of 20.4.

P/B above the industry

Lamb Weston's price-to-book of 4.34 is above the Food and Kindred Products median of 2.12.

Trading below fair value

The share price of $56.87 is below our fair value estimate of $61.92.

Margin of safety under 20%

The price is 8.2% below fair value, less than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew 7.3% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew -33.1% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew -13.4% over the last twelve months, against a 5-year average of -1.8% a year.

Growing slower than the industry

Revenue grew 2.6% over the last twelve months; the Food and Kindred Products median is 2.6%.

Guidance lowered

Lamb Weston lowered its Fiscal 2027 Interest expense, net outlook on Oct 6, 2026.

Gross margin slipping

Gross margin was 19.4% over the last twelve months, against 21.5% a year earlier.

Return on equity under 15%

Return on equity was 14.2% over the last twelve months and averaged 48.7% over five years; we look for 15% on both.

Return on capital under 10%

Return on invested capital was 6.7%, below the 10% that usually covers the cost of capital.

Return on equity above the industry

Lamb Weston's return on equity of 14.2% is above the Food and Kindred Products median of -2.5%.

Earnings shrank over 5 years

Net income shrank 1.8% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 3.8% over the last twelve months, against a 5-year average of 9.0%.

Net margin above the industry

Lamb Weston's net margin of 3.8% is above the Food and Kindred Products median of -5.7%.

High debt

Debt is 217% of shareholders' equity, above the 40% we consider low.

Debt falling against equity

Debt to equity fell from 570% five years ago to 217%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 21.0% of total debt.

Interest coverage

Interest expense is not reported separately.

Short-term assets cover short-term debts

Current assets are 1.45 times current liabilities.

Bankruptcy risk in the grey zone

The Altman Z-score is 2.65; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Lamb Weston paid dividends worth 2.0% of the share price over the last twelve months.

Yield below Treasuries

The 2.0% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Lamb Weston yields 2.0%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 81.6% of net income.

Covered by free cash flow

Dividends take 50.5% of free cash flow.