China GDP grows 5% in Q1, beats expectations on exports, spending strength
Lamb Weston Holdings Inc. is set to report fiscal third-quarter results before the market opens Wednesday, with analysts bracing for a steep profit decline as the frozen-potato giant navigates weak restaurant traffic and pricing pressure.
Analysts expect earnings of $0.626 per share on revenue of $1.5 billion for the February quarter, representing a 43% year-over-year decline in earnings and a 1.3% revenue drop. The outlook marks a sequential retreat from December’s second quarter, when net sales rose 1% to $1.62 billion and the company posted earnings of $0.69 per share, topping estimates.
Volume climbed 8% in the recent quarter, yet that strength was offset by an 8% decline in price and mix as the company leaned into trade support to protect share, highlighting the central challenge facing the Eagle, Idaho-based french fry supplier.
Sentiment has deteriorated in recent weeks. EPS estimates have declined roughly 2% over the past seven days and 1.6% over the past two months, while revenue estimates have edged down slightly. Analysts remain cautiously optimistic overall, maintaining a Buy consensus rating with a mean price target of $52, implying 27% upside from the stock’s current $40.95. Yet recent moves signal growing caution: JPMorgan and Deutsche Bank both lowered their price targets in March.
What Investors Are Watching
Three questions loom over Wednesday’s report. First, can Lamb Weston deliver on its $100 million fiscal 2026 cost-savings target? Activist investor Starboard Value sent a letter March 9 urging the company to double its cost-cutting efforts, particularly in selling and administrative expenses, and to review its international operations for potential divestitures in select Asia-Pacific markets. Any update on progress toward those savings will be scrutinized.
Second, the foodservice industry continues to grapple with subdued restaurant traffic, a trend that has persisted for several quarters. Investors will watch whether Lamb Weston can maintain volume momentum without further sacrificing pricing, a balance that has proven elusive.
Third, margin trajectory remains critical. Adjusted EBITDA slipped 3% in the prior quarter to $285.7 million despite revenue growth, reflecting the strain from promotional activity and higher costs. Whether gross margins can stabilize will signal the company’s ability to navigate near-term headwinds.
The company has been executing a broader restructuring, including closing its Munro, Argentina plant and consolidating Latin America production into its new Mar del Plata facility, part of a multi-year plan targeting $250 million in annual savings by fiscal 2028.
Wednesday’s results will offer a critical snapshot of whether operational discipline can offset the persistent pressures weighing on the frozen-potato industry—and whether Lamb Weston can regain investor confidence after a tumultuous year that has seen shares slide near 52-week lows.
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