Lamb Weston (LW) Downgraded by Zacks Investment Research to Sell

Zacks Investment Research lowered shares of Lamb Weston (NYSE:LW) from a hold rating to a sell rating in a report issued on Tuesday.

According to Zacks, “Lamb Weston’s shares have declined and underperformed the industry in the past three months. The company has been incurring high SG&A expenses for a while now and expects the same to remain high in fiscal 2019. Also, management expects transport, input and warehouse cost inflation to be a hurdle, which is likely to keep gross margin under pressure. Management also anticipates to face headwinds like a poor potato crop at its European joint venture, though it expects to offset these hurdles through solid pricing and cost-saving initiatives. These factors also aided the company in second-quarter fiscal 2019, wherein Both top and bottom lines grew year over year and topped estimates for the ninth straight time. While earnings gained from lower tax rate and higher operating income, sales were backed by strong volumes and price/mix. Markedly, the company expects the operating environment to be favorable in fiscal 2019.”

Other equities research analysts have also recently issued reports about the company. Jefferies Financial Group set a $85.00 price target on Lamb Weston and gave the stock a buy rating in a research note on Friday, January 4th. Daiwa Capital Markets assumed coverage on Lamb Weston in a research note on Wednesday, February 27th. They issued an outperform rating on the stock. Stifel Nicolaus raised Lamb Weston from a hold rating to a buy rating and set a $80.00 price target on the stock in a research note on Tuesday, January 22nd. Finally, Barclays upped their price target on Lamb Weston from $76.00 to $82.00 and gave the stock an overweight rating in a research note on Monday, January 7th. Three research analysts have rated the stock with a sell rating, four have given a hold rating and four have issued a buy rating to the company. The stock presently has an average rating of Hold and an average price target of $77.14.

Shares of LW stock opened at $69.71 on Tuesday. The firm has a market capitalization of $10.24 billion, a P/E ratio of 26.21, a PEG ratio of 1.91 and a beta of -0.19. Lamb Weston has a twelve month low of $54.04 and a twelve month high of $83.86.

Lamb Weston (NYSE:LW) last issued its quarterly earnings results on Friday, January 4th. The specialty retailer reported $0.80 earnings per share for the quarter, topping the Thomson Reuters’ consensus estimate of $0.70 by $0.10. The company had revenue of $911.40 million for the quarter, compared to analysts’ expectations of $897.08 million. Lamb Weston had a negative return on equity of 160.25% and a net margin of 13.13%. The firm’s revenue for the quarter was up 10.5% on a year-over-year basis. During the same period in the prior year, the firm earned $0.54 earnings per share. As a group, analysts predict that Lamb Weston will post 3.05 EPS for the current year.

The business also recently announced a quarterly dividend, which was paid on Friday, March 1st. Stockholders of record on Friday, February 1st were paid a $0.20 dividend. This is a boost from Lamb Weston’s previous quarterly dividend of $0.19. This represents a $0.80 dividend on an annualized basis and a dividend yield of 1.15%. The ex-dividend date of this dividend was Thursday, January 31st. Lamb Weston’s dividend payout ratio is currently 30.08%.

Several hedge funds and other institutional investors have recently added to or reduced their stakes in the company. MUFG Securities EMEA plc purchased a new stake in shares of Lamb Weston during the fourth quarter valued at $13,793,000. Norges Bank purchased a new stake in shares of Lamb Weston during the fourth quarter valued at $107,505,000. Teacher Retirement System of Texas boosted its position in shares of Lamb Weston by 37.8% during the fourth quarter. Teacher Retirement System of Texas now owns 23,729 shares of the specialty retailer’s stock valued at $1,746,000 after buying an additional 6,505 shares during the last quarter. Dimensional Fund Advisors LP boosted its position in shares of Lamb Weston by 17.2% during the fourth quarter. Dimensional Fund Advisors LP now owns 459,288 shares of the specialty retailer’s stock valued at $33,787,000 after buying an additional 67,448 shares during the last quarter. Finally, Massmutual Trust Co. FSB ADV boosted its position in shares of Lamb Weston by 5.3% during the fourth quarter. Massmutual Trust Co. FSB ADV now owns 31,557 shares of the specialty retailer’s stock valued at $2,321,000 after buying an additional 1,602 shares during the last quarter. 82.03% of the stock is currently owned by hedge funds and other institutional investors.

About Lamb Weston

Lamb Weston Holdings, Inc produces, distributes, and markets value-added frozen potato products worldwide. It operates through four segments: Global, Foodservice, Retail, and Other. The company offers frozen potatoes, sweet potatoes, and appetizers under the Lamb Weston brand name, as well as various customer labels.

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