Potato supplier Lamb Weston stock rallies after earnings beat, as higher prices offset lower volumes
Shares of Lamb Weston Holdings Inc. jumped 2.0% in premarket trading Wednesday, after the potato supplier reported fiscal first-quarter profit that beat expectations, higher prices helped offset a volume decline. Net income for the quarter to Aug. 28 jumped to $231.9 million, or $1.60 a share, from $29.8 million, or 20 cents a share, in the year-ago period. Excluding nonrecurring items, adjusted earnings per share increased 317% to 75 cents, above the FactSet consensus of 50 cents. Sales grew 14% to $1.13 billion, matching the FactSet consensus. Volume declined 5%, due primarily to softer casual dining and full-service restaurant traffic, but price/mix increased 19%. The company affirmed its fiscal 2023 outlook for sales of $4.7 billion to $4.8 billion and adjusted EPS of $2.45 to $2.85. The company expects the potato crop in its growing regions to be at the lower end of historical averages, with “good overall quality and below average yields” because of the “significant” heat waves late in the season. The stock has run up 24.4% year to date through Tuesday while the S&P 500 has lost 20.5%.
