Lamb Weston (NYSE:LW) stock dropped more than 19% in yesterday’s trading session after the company reported weaker-than-expected Q3 results. Also, the company provided a disappointing outlook for Fiscal 2024, owing to problems with the new software system in North America.
LW supplies frozen potato products, including french fries and other potato products, to restaurants and food service operators worldwide.
LW Stock: Q3 Financial Highlights
The company’s Q3 sales grew 16% year-over-year to $1.46 billion but fell short of the analysts’ expectations of $1.65 billion. Meanwhile, adjusted earnings per share (EPS) decreased by 18% to $1.20 and came below the Street’s estimates of $1.45 per share.
Lamb Weston’s quarterly performance was largely impacted by a decrease in restaurant traffic. Additionally, the transition to a new enterprise resource planning (ERP) system in North America was slower than expected, which led to a negative impact on Q3 results.
After the transition, LW experienced lower visibility into the inventories of finished goods in its distribution centers. This subsequently impacted LW’s ability to fulfill customer orders. As a result, the volume in Q3 fell by 16% year-over-year.
LW Provides Weak Fiscal 2024 Outlook
Lamb Weston lowered its adjusted EPS guidance range to $5.50 to $5.65, compared to the earlier guidance range of $5.70 to $6.15. Moreover, it expects full-year sales between $6.54 billion and $6.6 billion, down from prior guidance of $6.8 billion to $7 billion. Analysts expected LW to deliver revenue of about $6.88 billion with earnings of $6.03 in Fiscal 2024.
Is LW Stock a Good Buy?
It is worth highlighting that following the release of Q3 results, three analysts rated Lamb Weston stock a Buy.
Wall Street remains optimistic about LW. On TipRanks, it has a Strong Buy consensus rating based on seven unanimous Buy ratings. The analysts’ average price target on LW stock of $133.14 implies 63.3% upside potential. Shares of the company have declined by about 23% in the past three months.
