2024-04-05 04:20:42 ET
Summary
- Lamb Weston shares plunged 20% due to an earnings miss and reduced guidance, presenting a potential buying opportunity.
- The company has shown significant growth since its spin-off in 2017 and holds a leading position in the frozen potato category.
- The stock has strong support at the $80 level and could potentially rebound to previous levels in the coming weeks.
Lamb Weston Holdings ( LW ) shares plunged on April 4, from just over $100 per share and were down about 20%, to the low $80 level. This was due to an earnings miss and reduced guidance. Overall, this appears to be an overreaction and for me, that means a potential buying opportunity. The earnings miss and reduced guidance seem to be (in large part) due to one-time issues. This is one reason why I see this as a buying opportunity, but there are other reasons which I will go into more below. A lot of investors may have never heard of this company, but almost everyone has consumed the potato products it makes, especially the French fries. Let's take a closer look below:
As the data below shows, Lamb Weston has grown significantly over the past several years. This company was a spin-off from Conagra ( CAG ) in 2017, and that is why the financial comparisons started that year. Since 2017, revenues and profits have more than doubled. In addition, this company holds the #1 position in North America and #2 position globally for the frozen potato category. As a best-in-breed market leader, I believe it should be trading at a higher valuation than where it is today....
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For further details see:
Lamb Weston: I'm Buying The 20% Post-Earnings Plunge