Lamb Weston Holdings, Inc. (LW)
NEUTRALFundamental
62
Price
$53.94
Market Cap
$7.47B
Part 1 · What the company is worth
Overview
Lamb Weston freezes potatoes into french fries and other potato products sold to restaurants, foodservice distributors and grocery stores around the world. It grows relationships with potato farmers under multi-year contracts, runs processing plants across North America, Europe, Argentina and Asia, and ships finished frozen products through a cold chain to customers who then fry or bake them for consumers. It is one of a handful of companies with the scale to supply large restaurant chains globally.
How it makes money
Revenue comes from selling frozen potato products by the pound to restaurant chains, foodservice distributors and retailers, priced to cover the cost of raw potatoes, processing and freight, plus a margin. The single largest customer relationship is McDonald's, at roughly 15% of net sales, and the top ten customers together account for about half of revenue, so results move closely with how those large accounts are ordering. About a third of sales are outside North America.
Revenue by segment
Sales to restaurant chains, foodservice distributors and retailers across the United States, Canada and Mexico — about two-thirds of revenue.
All sales outside North America, spanning Europe, Asia-Pacific, Latin America and the Middle East, served from plants on several continents.
What drives demand
Moderately cyclicalDemand tracks restaurant traffic and away-from-home eating more than the broader economy — soft restaurant traffic in Europe and an oversupply of potatoes weighed on results in fiscal 2026 even without a recession. Potato crop yields, which swing with weather each season, add a further layer of volatility on the supply side that is unrelated to economic cycles.
Key risks
- Input cost and tariff volatility — A large share of costs comes from commodities such as raw potatoes, edible oil and energy, and the company says new and retaliatory tariffs announced through 2025 and 2026 have added further volatility it may not be able to pass through in prices.
- Customer concentration and bargaining power — Large, sophisticated customers such as major restaurant chains and retailers can resist price increases and demand promotional support, and the loss of a significant customer like McDonald's would materially hurt results.
- Potato crop and weather risk — Extreme heat, excess rain or pests can cut potato yields and quality, while unusually favorable growing conditions can create an oversupply — as happened in fiscal 2026 in Europe — forcing the company to write off excess raw potatoes.
- Dependence on third parties in the supply chain — The company relies on co-packers, warehousing partners and transportation providers it does not control, and disruption at any of them — from labor issues to shipping bottlenecks — can cause manufacturing delays and lost revenue.
Customer concentration
Top customers account for 50% of revenue
The ten largest customers accounted for about 50% of net sales in fiscal 2026, and McDonald's alone represented approximately 15% — the only customer above the 10% disclosure threshold.
The case for
Buyers argue that Lamb Weston's global processing scale and entrenched position with the largest restaurant chains, led by a decades-long relationship with McDonald's, give it pricing power and a cost structure smaller rivals cannot easily replicate as global french fry demand keeps expanding.
The case against
Sellers fear that dependence on a handful of giant customers cuts both ways — McDonald's alone is worth about 15% of sales — and that soft restaurant traffic, potato oversupply and new tariffs can all pressure margins at the same time, as they did in fiscal 2026.
Written by the editors, published on August 18, 2026
Direct competitors
Who this company fights with for the same customers
No editorial profile for this company yet
No competitor list for this company yet.
Balance Sheet & Liquidity
Revenue
$6.61B
Trailing 12 months (through 5/31/2026)
Net Income
$290M
Trailing 12 months (through 5/31/2026)
Free Cash Flow
$540M
Total Equity
$1.82B
Total Liabilities
$5.56B
Current Ratio
1.42
Interest Coverage
-
Debt/EBITDA
4.09
Earnings Per Share
Revenue & Net Income
Free Cash Flow
Income Breakdown
Historical statement
Margins over time
Debt over time
How heavy the debt is
Growth grid
Growth — Revenue
Fair Value Estimation
Fair Value
$50.08
Current Price
$53.94
Margin of Safety
-7.7%
Fair Value Range
$33.59 - $66.57
Estimation Methods
Valuation Metrics
P/E Ratio
26.35
ROE
15.9%
P/B Ratio
4.13
P/FCF
13.95
Gross Margin
20.6%
ROIC
7.8%
Profitability Radar
Value Creation (Economic Moat)
ROIC
7.8%
WACC
5.2%
ROIC − WACC
+2.7 pp
ROIC exceeds the cost of capital — the company is creating value for shareholders.
Fundamental Analysis Criteria
Passed (15)
- EPS shows upward trend
- ROIC 7.8%
- P/FCF 13.95
- Debt/Equity ratio
- Operating Margin 8.9%
- Positive Free Cash Flow
- Current Ratio
- Debt/EBITDA
- Return on Tangible Assets
- ROE 16.1%
- Revenue Growth 5Y 12.5%
- Earnings Surprise avg 20.5%
- Earnings Quality (OCF/NI) 3.25
- Share Dilution -2.4%
- Piotroski F-Score 7/9
Failed (10)
- EPS CAGR 1.17%
- Price CAGR 3.56%
- Gross Margin 20.6%
- P/B Ratio 4.13
- CapEx intensity
- Low reliance on intangibles
- Price below Graham Number
- DCF valuation (Overvalued)
- Analyst Consensus 48% Buy
- Net Margin Trend 4.4% vs 5.5%
Unavailable (3)
- Dividend Payout NaN%
- Interest Coverage
- PEG Ratio (need PE > 0 and growth > 0)
Piotroski F-Score
Strong financial health
Earnings Quality
High quality: earnings backed by cash
Share Dilution
Buying back shares. Shareholder friendly
Governance
Executive Team
| Name | Title | Age |
|---|---|---|
| Mr. Jan Eli B. Craps | Executive Chair | 48 |
| Mr. Michael Jared Smith | President, CEO & Director | 48 |
| Mr. James Derek Gray | Chief Financial Officer | 58 |
| Mr. Marc J.P.H. Schroeder | President of International | 54 |
| Ms. Sylvia J. Wilks | Chief Supply Chain Officer | 61 |
| Mr. Benjamin Heselton | Chief Information Officer | 53 |
| Ms. Debbie Hancock | Vice President of Investor Relations | - |
| Mr. Eryk J. Spytek J.D. | General Counsel & Chief Compliance Officer | 57 |
| Mr. Steven J. Younes J.D. | Chief Human Resources Officer | 59 |
| Mr. Michael Christopher Crowley | President of North America | 52 |
Audit Risk
1
Board Risk
4
Compensation Risk
2
Shareholder Rights Risk
1
Part 2 · The price and when to enter
This part won't tell you whether the company is worth owning: it helps you choose when to buy it, once the fundamentals have convinced you. Inside: technical analysis, potential, historical drawdowns, gamma exposure.
Latest News
Recent headlines for LW, sourced from Markets Gazette.
- 4/30/2026POSITIVEActivist Starboard Pushes for Lamb Weston to Hold Investor Day
Activist investor Starboard Value LP is reportedly pushing Lamb Weston Holdings Inc. to schedule an investor day. The goal is for the french-fry maker to articulate a clear strategy for earnings growth. This move by Starboard, known for its aggressive engagement tactics, suggests a belief that Lamb Weston's current valuation does not reflect its potential. Investors will be looking for concrete plans and financial targets that could unlock shareholder value, potentially leading to a re-rating of the stock if management can effectively present a compelling turnaround or growth narrative.
- 4/1/2026NEUTRALLamb Weston Earnings Are Imminent; These Most Accurate Analysts Revise Forecasts Ahead Of Earnings Call
Lamb Weston Holdings, Inc. (LW) is scheduled to report its third-quarter earnings on April 1st. Analysts project earnings per share of $0.61, with a consensus revenue estimate of $1.49 billion. Recent analyst actions include Jefferies maintaining a Buy rating in October 2021, Stifel upgrading to Buy from Hold in May 2021, and Goldman Sachs downgrading to Neutral from Buy in April 2021. The upcoming earnings report will provide crucial insights into the company's performance and future outlook, influencing investor sentiment.
- 3/2/2026NEGATIVE$64 Million Exit: Lamb Weston Stock Down 9% As Investor Dumps 1 Million Shares
Lamb Weston, a leader in value-added frozen potato products, experienced a sharp 9% decline in its stock value. The downturn was triggered by an investor offloading 1 million shares, a transaction valued at $64 million. This significant divestment raises questions about investor confidence and potential future selling pressure. Market participants should assess whether this is an isolated strategic move or a signal of broader concerns that could impact the stock's performance in the near term. The event highlights the market's sensitivity to large share transactions.
via Markets Gazette