What Happened?
Shares of potato products company Lamb Weston (NYSE: LW) fell 21.5% in the morning session after the company reported disappointing third quarter (FQ2 2025) financial results, with revenue and EPS falling below Wall Street's expectations. Its full-year revenue guidance also missed significantly, and its full-year EBITDA guidance fell short of Wall Street's estimates.
Management considered the results below expectations and blamed the weaknesses on "Higher-than-expected manufacturing costs and softer volumes accounted for the shortfall." Equally worrisome, the company expects the challenges to persist for the remainder of the fiscal year and into fiscal 2026, driven primarily by "an accelerating rate of capacity additions and continued near-term softening of global frozen potato demand below historical rates, particularly outside North America." Overall, this was a weaker quarter.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Lamb Weston? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Lamb Weston’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. Moves this big are rare 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 5 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 43.5% since the beginning of the year, and at $60.18 per share, it is trading 45.3% below its 52-week high of $109.99 from January 2024. Investors who bought $1,000 worth of Lamb Weston’s shares 5 years ago would now be looking at an investment worth $714.73.
Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefiting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.
