What Happened?
Shares of potato products company Lamb Weston (NYSE: LW) jumped 17% in the afternoon session after the company reported fiscal fourth-quarter results that significantly beat Wall Street expectations and announced a new strategic cost-saving program.
The company posted adjusted earnings of 87 cents per share on revenue of $1.68 billion. These results comfortably surpassed analysts' average estimates, which called for earnings of 63 cents per share on revenue of $1.59 billion. The strong performance was driven by an 8% increase in overall sales volume, which included a notable 16% jump in international volume. This growth was attributed to new customer contracts and recovering demand.
Adding to the positive sentiment, Lamb Weston unveiled a new cost-cutting plan, "Focus to Win," aimed at delivering at least $250 million in annualized savings by the end of fiscal 2028. The initiative included a global workforce reduction of approximately 4%. While the company's fiscal 2026 guidance was mixed, the strong quarterly beat and the aggressive new efficiency program appeared to give investors confidence in the company's direction.
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What Is The Market Telling Us
Lamb Weston’s shares are quite volatile and have had 15 moves greater than 5% over the last year. But moves this big are rare even for Lamb Weston and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 12 months ago when the stock dropped 27.8% on the news that the company reported weak second-quarter earnings results: Its revenue and EPS missed while its full-year earnings forecast fell short of Wall Street's estimates.
Management summarized the drivers of the weakness: "Our price/mix results were below our expectations, while market share losses and a slowdown in restaurant traffic in the U.S. and many of our key international markets were greater than we expected. We also incurred losses related to a voluntary product withdrawal." Overall, this was a bad quarter for Lamb Weston.
Lamb Weston is down 13.3% since the beginning of the year, and at $57.25 per share, it is trading 30.5% below its 52-week high of $82.32 from December 2024. Investors who bought $1,000 worth of Lamb Weston’s shares 5 years ago would now be looking at an investment worth $833.02.
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