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Hot Stock under Consideration: Lamb Weston Holdings Inc. (NYSE: LW)

EAGLE, Idaho, June 28, 2019 – Shares of Lamb Weston Holdings Inc. (NYSE: LW) showed the bullish trend with a higher momentum of 1.64% to $62.71. The company traded total volume of 395.360K shares as contrast to its average volume of 1.81M shares. The company has a market value of $9.10B and about 147.48M shares outstanding.

Lamb Weston Holdings Inc. (LW) reported fiscal third-quarter profit of $140.90M.

Q3 2019 Commentary:

Net sales increased $63.40M to $926.80M, up 7 percent as compared to the year-ago period. Volume increased 4 percent, mainly driven by growth in the Company’s Global segment. Price/mix increased 3 percent because of pricing actions and favorable mix. About 2 percentage points of the volume increase, and $18.50M of the net sales increase, related to increased revenue for customized products made to customers’ unique recipes for which the timing of revenue recognition changed with the Company’s adoption of Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“new revenue standard”) at the starting of fiscal 2019.

Income from operations rose 15 percent to $193.80M as compared to the year-ago period, which included $1.70M of pre-tax costs in the prior year period related to the Company’s separation from Conagra Brands, Inc. (formerly ConAgra Foods, Inc., “Conagra”) on November 9, 2016.

Excluding this comparability item, income from operations grew $22.90M, or 13 percent, driven by higher sales and gross profit. Gross profit increased $31.10M because of favorable price/mix, volume growth and supply chain efficiency savings, as well as a $5.70M benefit related to a boost in sales of customized products under the new revenue standard. This increase was partially offset by input, manufacturing and transportation cost inflation. In addition, gross profit included a $4.00M gain related to unrealized mark-to-market adjustments and realized settlements associated with commodity hedging contracts in the current quarter, contrast with a $1.30M loss related to these items in the prior year period.

The rise in gross profit was partially offset by an $8.20M increase in selling, general and administrative expenses (“SG&A”), excluding comparability items. The increase was mostly driven by higher expenses related to information technology services and infrastructure, as well as investments in the Company’s sales, marketing and operating capabilities. In addition, advertising and promotional expense increased about $1.0M as compared to the prior year period.

Adjusted EBITDA counting unconsolidated joint ventures increased $15.60M to $253.20M, up 7 percent as compared to the prior year period, mainly because of growth in income from operations and an approximate $4.0M incremental benefit from acquiring the remaining 50.01% equity interest in the Company’s joint venture (the “BSW Acquisition”), Lamb Weston BSW, LLC (“Lamb Weston BSW”), partially offset by lower equity method investment earnings.

The Company offered net profit margin of 12.40% while its gross profit margin was 26.80%. ROE was recorded as -227.20%. The stock, as of recent close, has shown the weekly upbeat performance of 0.59% which was maintained at -16.12% in this year.