Lamb Weston Earnings: Cutting Fair Value Estimate on Share Losses, Slow Traffic, and Excess Capacity

Narrow-moat Lamb Weston reported fiscal 2024 fourth-quarter sales down 5% to $1.6 billion and adjusted EBITDA down 15% to $283 million. These results massively missed both guidance ($1.7 billion and $362 million, respectively) and our forecast ($1.69 billion and $369 million, respectively). Most of the sales and EBITDA shortfall came from an 8% volume decline, more than half of which was attributable to market share loss and one-fourth to soft restaurant traffic. Worse still, the company expects these woes to continue into fiscal 2025. Thus, we are cutting our fair value estimate to $95 per share from $110 on weaker near- and medium-term outlooks.