LAMB WESTON HOLDINGS INC (LW) Stock Fundamental Analysis
NYSE:LW - New York Stock Exchange, Inc. - US5132721045 - Common Stock - Currency: USD
We assign a fundamental rating of 4 out of 10 to LW. LW was compared to 91 industry peers in the Food Products industry. While LW is still in line with the averages on profitability rating, there are concerns on its financial health. LW has a correct valuation and a medium growth rate.
1. Profitability
1.1 Basic Checks
LW had positive earnings in the past year.
LW had a positive operating cash flow in the past year.
In the past 5 years LW has always been profitable.
Each year in the past 5 years LW had a positive operating cash flow.
1.2 Ratios
LW has a Return On Assets of 4.93%. This is in the better half of the industry: LW outperforms 63.53% of its industry peers.
Looking at the Return On Equity, with a value of 22.48%, LW belongs to the top of the industry, outperforming 91.76% of the companies in the same industry.
LW has a Return On Invested Capital of 8.95%. This is in the better half of the industry: LW outperforms 78.82% of its industry peers.
The Average Return On Invested Capital over the past 3 years for LW is above the industry average of 9.02%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.93% | ||
| ROE | 22.48% | ||
| ROIC | 8.95% |
ROA(3y)10.06%
ROA(5y)9.11%
ROE(3y)55.93%
ROE(5y)77.28%
ROIC(3y)11.5%
ROIC(5y)10.81%
1.3 Margins
LW has a Profit Margin of 5.80%. This is in the better half of the industry: LW outperforms 71.76% of its industry peers.
LW's Profit Margin has declined in the last couple of years.
With a decent Operating Margin value of 11.90%, LW is doing good in the industry, outperforming 77.65% of the companies in the same industry.
LW's Operating Margin has been stable in the last couple of years.
LW has a Gross Margin (22.54%) which is comparable to the rest of the industry.
LW's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 11.9% | ||
| PM (TTM) | 5.8% | ||
| GM | 22.54% |
OM growth 3Y8.95%
OM growth 5Y-1.27%
PM growth 3Y9.02%
PM growth 5Y-2.07%
GM growth 3Y6.42%
GM growth 5Y0.45%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), LW is creating some value.
Compared to 1 year ago, LW has less shares outstanding
LW has less shares outstanding than it did 5 years ago.
The debt/assets ratio for LW has been reduced compared to a year ago.
2.2 Solvency
LW has an Altman-Z score of 2.61. This is not the best score and indicates that LW is in the grey zone with still only limited risk for bankruptcy at the moment.
LW has a Altman-Z score (2.61) which is comparable to the rest of the industry.
LW has a Debt/Equity ratio of 2.46. This is a high value indicating a heavy dependency on external financing.
With a Debt to Equity ratio value of 2.46, LW is not doing good in the industry: 91.76% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.46 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 2.61 |
ROIC/WACC1.22
WACC7.36%
2.3 Liquidity
A Current Ratio of 1.35 indicates that LW should not have too much problems paying its short term obligations.
LW has a Current ratio of 1.35. This is comparable to the rest of the industry: LW outperforms 41.18% of its industry peers.
A Quick Ratio of 0.53 indicates that LW may have some problems paying its short term obligations.
LW has a Quick ratio of 0.53. This is in the lower half of the industry: LW underperforms 77.65% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.35 | ||
| Quick Ratio | 0.53 |
3. Growth
3.1 Past
The earnings per share for LW have decreased strongly by -41.19% in the last year.
The Earnings Per Share has been growing by 9.46% on average over the past years. This is quite good.
The Revenue has decreased by -0.33% in the past year.
Measured over the past years, LW shows a quite strong growth in Revenue. The Revenue has been growing by 11.48% on average per year.
EPS 1Y (TTM)-41.19%
EPS 3Y32.81%
EPS 5Y9.46%
EPS Q2Q%-54.48%
Revenue 1Y (TTM)-0.33%
Revenue growth 3Y20.78%
Revenue growth 5Y11.48%
Sales Q2Q%-7.57%
3.2 Future
Based on estimates for the next years, LW will show a quite strong growth in Earnings Per Share. The EPS will grow by 8.77% on average per year.
LW is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 3.97% yearly.
EPS Next Y-37.17%
EPS Next 2Y-13.43%
EPS Next 3Y-6.58%
EPS Next 5Y8.77%
Revenue Next Year-3.08%
Revenue Next 2Y-0.47%
Revenue Next 3Y0.76%
Revenue Next 5Y3.97%
3.3 Evolution
The EPS growth rate is stable: in the next years the growth will be about the same than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 16.56, LW is valued correctly.
LW's Price/Earnings ratio is a bit cheaper when compared to the industry. LW is cheaper than 62.35% of the companies in the same industry.
LW is valuated rather cheaply when we compare the Price/Earnings ratio to 29.63, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 14.72 indicates a correct valuation of LW.
Based on the Price/Forward Earnings ratio, LW is valued a bit cheaper than the industry average as 75.29% of the companies are valued more expensively.
When comparing the Price/Forward Earnings ratio of LW to the average of the S&P500 Index (22.68), we can say LW is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.56 | ||
| Fwd PE | 14.72 |
4.2 Price Multiples
LW's Enterprise Value to EBITDA ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 10.43 |
4.3 Compensation for Growth
The decent profitability rating of LW may justify a higher PE ratio.
A cheap valuation may be justified as LW's earnings are expected to decrease with -6.58% in the coming years.
PEG (NY)N/A
PEG (5Y)1.75
EPS Next 2Y-13.43%
EPS Next 3Y-6.58%
5. Dividend
5.1 Amount
LW has a Yearly Dividend Yield of 2.58%. Purely for dividend investing, there may be better candidates out there.
In the last 3 months the price of LW has falen by -27.46%. A price decline artificially increases the dividend yield. It may be a sign investors do not expect the dividend to last.
Compared to an average industry Dividend Yield of 3.94, LW pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 2.27, LW has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.58% |
5.2 History
On average, the dividend of LW grows each year by 9.19%, which is quite nice.
LW has been paying a dividend for over 5 years, so it has already some track record.
As LW did not decrease their dividend in the past 5 years, we can say the dividend looks stable.
Dividend Growth(5Y)9.19%
Div Incr Years7
Div Non Decr Years7
5.3 Sustainability
LW pays out 53.31% of its income as dividend. This is a bit on the high side, but may be sustainable.
LW's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP53.31%
EPS Next 2Y-13.43%
EPS Next 3Y-6.58%
55.8
-1.01 (-1.78%)
Chartmill FA Rating
GICS SectorConsumer Staples
GICS IndustryGroupFood, Beverage & Tobacco
GICS IndustryFood Products
Earnings (Last)
Earnings (Next)
Inst Owners98.78%
Inst Owner Change6.68%
Ins Owners0.74%
Ins Owner Change2.67%
Market Cap7.96B
Analysts74.29
Price Target68.81 (23.32%)
Short Float %7.09%
Short Ratio3.63
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.58% |
Yearly Dividend1.2
Dividend Growth(5Y)9.19%
DP53.31%
Div Incr Years7
Div Non Decr Years7
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-19%
Min EPS beat(2)-36.69%
Max EPS beat(2)-1.31%
EPS beat(4)0
Avg EPS beat(4)-24.44%
Min EPS beat(4)-39.85%
Max EPS beat(4)-1.31%
EPS beat(8)3
Avg EPS beat(8)0.22%
EPS beat(12)7
Avg EPS beat(12)16.84%
EPS beat(16)9
Avg EPS beat(16)11.88%
Revenue beat(2)1
Avg Revenue beat(2)-1.94%
Min Revenue beat(2)-7.14%
Max Revenue beat(2)3.25%
Revenue beat(4)1
Avg Revenue beat(4)-6.48%
Min Revenue beat(4)-13.91%
Max Revenue beat(4)3.25%
Revenue beat(8)2
Avg Revenue beat(8)-2.9%
Revenue beat(12)4
Avg Revenue beat(12)-1.51%
Revenue beat(16)6
Avg Revenue beat(16)-0.78%
PT rev (1m)-3.86%
PT rev (3m)-9.21%
EPS NQ rev (1m)-32.64%
EPS NQ rev (3m)-47.3%
EPS NY rev (1m)-26.58%
EPS NY rev (3m)-27.26%
Revenue NQ rev (1m)-7.84%
Revenue NQ rev (3m)-6.84%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-4.51%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.56 | ||
| Fwd PE | 14.72 | ||
| P/S | 1.26 | ||
| P/FCF | N/A | ||
| P/OCF | 10.31 | ||
| P/B | 4.87 | ||
| P/tB | 15.81 | ||
| EV/EBITDA | 10.43 |
EPS(TTM)3.37
EY6.04%
EPS(NY)3.79
Fwd EY6.8%
FCF(TTM)-1.12
FCFYN/A
OCF(TTM)5.41
OCFY9.7%
SpS44.34
BVpS11.45
TBVpS3.53
PEG (NY)N/A
PEG (5Y)1.75
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.93% | ||
| ROE | 22.48% | ||
| ROCE | 12.92% | ||
| ROIC | 8.95% | ||
| ROICexc | 9.07% | ||
| ROICexgc | 11.14% | ||
| OM | 11.9% | ||
| PM (TTM) | 5.8% | ||
| GM | 22.54% | ||
| FCFM | N/A |
ROA(3y)10.06%
ROA(5y)9.11%
ROE(3y)55.93%
ROE(5y)77.28%
ROIC(3y)11.5%
ROIC(5y)10.81%
ROICexc(3y)12.37%
ROICexc(5y)12.84%
ROICexgc(3y)15.2%
ROICexgc(5y)15.33%
ROCE(3y)16.24%
ROCE(5y)15.46%
ROICexcg growth 3Y4.73%
ROICexcg growth 5Y-5.56%
ROICexc growth 3Y2.18%
ROICexc growth 5Y-7.67%
OM growth 3Y8.95%
OM growth 5Y-1.27%
PM growth 3Y9.02%
PM growth 5Y-2.07%
GM growth 3Y6.42%
GM growth 5Y0.45%
F-Score5
Asset Turnover0.85
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.46 | ||
| Debt/FCF | N/A | ||
| Debt/EBITDA | 3.55 | ||
| Cap/Depr | 247.04% | ||
| Cap/Sales | 14.73% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 68.36% | ||
| Profit Quality | N/A | ||
| Current Ratio | 1.35 | ||
| Quick Ratio | 0.53 | ||
| Altman-Z | 2.61 |
F-Score5
WACC7.36%
ROIC/WACC1.22
Cap/Depr(3y)271.04%
Cap/Depr(5y)202.57%
Cap/Sales(3y)12.19%
Cap/Sales(5y)9.3%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)-41.19%
EPS 3Y32.81%
EPS 5Y9.46%
EPS Q2Q%-54.48%
EPS Next Y-37.17%
EPS Next 2Y-13.43%
EPS Next 3Y-6.58%
EPS Next 5Y8.77%
Revenue 1Y (TTM)-0.33%
Revenue growth 3Y20.78%
Revenue growth 5Y11.48%
Sales Q2Q%-7.57%
Revenue Next Year-3.08%
Revenue Next 2Y-0.47%
Revenue Next 3Y0.76%
Revenue Next 5Y3.97%
EBIT growth 1Y-32.35%
EBIT growth 3Y31.59%
EBIT growth 5Y10.06%
EBIT Next Year2.68%
EBIT Next 3Y6.62%
EBIT Next 5Y5.9%
FCF growth 1Y-327.57%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y54.89%
OCF growth 3Y13%
OCF growth 5Y3.23%