Lamb Weston Q3 Sales Beat But Profits Fall, Stock Hits 1-Year Low

Lamb Weston's Q3 sales were $1.565 billion, higher than expected. However, profits fell, and the stock price dropped to a new 1-year low.
By Newsroom | Business, Finance |

Earnings Exceed Projections Amidst Profit Decline, Stock Price Tumbles

Lamb Weston Holdings (LW) reported Q3 results that, while beating analyst expectations on earnings and revenue, have seen its stock price fall significantly. The company, a key supplier to McDonald's, posted adjusted earnings per share of 72 cents, surpassing the estimated 61 cents. Quarterly sales reached $1.565 billion, outperforming the $1.492 billion consensus view.

JPMorgan Says Lamb Weston Holdings (LW) Q3 Results Were Better Than Feared - 1

Despite these top-line successes, profitability across key metrics declined year-over-year. The company pointed to pricing pressures and shifts in product mix as contributors to a slight dip in segment adjusted EBITDA, even with higher volumes. International operations, in particular, experienced more pronounced challenges, citing softer demand, competitive pressures, and increased costs, including a notable potato write-off.

JPMorgan Says Lamb Weston Holdings (LW) Q3 Results Were Better Than Feared - 2

Analyst Revisions and Market Reactions

The report has prompted a wave of analyst commentary and adjustments. While some firms like JPMorgan maintained a 'neutral' rating, citing expectations of a stabilizing North American market and understood international pressures, others have revised price targets downward. Wells Fargo & Company and Barclays both lowered their price targets for LW stock, with Wells Fargo setting a new target at $46.00 and Barclays at $46.00. Bank of America also adjusted its price target to $47.00.

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JPMorgan Says Lamb Weston Holdings (LW) Q3 Results Were Better Than Feared - 3

The market's reaction appears to be a divergence between the reported "beat" and underlying profitability concerns. Sentiment on platforms like Stocktwits saw a jump to 'bullish' amidst high message volumes following the results, yet the stock itself reached a new 1-year low following analyst downgrades. This disconnect suggests a market weighing the immediate earnings performance against longer-term financial health and competitive pressures.

JPMorgan Says Lamb Weston Holdings (LW) Q3 Results Were Better Than Feared - 4

Company Outlook and Institutional Activity

Lamb Weston has also raised its full-year net sales and EBITDA outlook, while simultaneously reducing expected 2026 capital expenditures. This move is interpreted by some as a signal of management's shift towards cash generation. However, the distribution of analyst ratings remains predominantly 'Hold', with three buy ratings and ten hold ratings from thirteen analysts in the last six months. This suggests analysts are awaiting clearer indications of the company's ability to translate volume growth into sustainable profitability and stronger pricing power.

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Institutional investors have shown varied activity. In Q4 2025, significant additions to holdings were seen from JPMorgan Chase & Co., M&T Bank Corp., and Price T. Rowe Associates Inc./MD/. Conversely, Millennium Management LLC and FMR LLC notably reduced their positions. The overall institutional landscape shows a mix of accumulating and divesting positions, reflecting differing perspectives on the company's future prospects.

Background on Lamb Weston

Lamb Weston, traded on the NYSE under the ticker LW, is a global leader in the processing and supply of frozen potato products. The company serves a diverse range of clients, including quick-service restaurants, full-service dining establishments, grocery chains, and food distributors. They offer customized product formats, packaging, and seasoning to meet evolving consumer and customer demands. The company's operations are impacted by global trade policies, geopolitical events, and fluctuations in input costs, factors that were noted in the Q3 outlook.

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Frequently Asked Questions

Q: Why did Lamb Weston's sales go up but profits go down in Q3?
Lamb Weston's sales increased to $1.565 billion in Q3, which was more than expected. However, the company faced higher costs and lower prices for its products, which caused profits to fall compared to last year.
Q: What happened to Lamb Weston's stock price after the Q3 results?
After the Q3 results were announced, Lamb Weston's stock price fell to a new low for the past year. This happened even though the company's sales were better than expected.
Q: Which companies lowered their price targets for Lamb Weston stock?
Wells Fargo & Company and Barclays both lowered their price targets for Lamb Weston stock to $46.00. Bank of America also adjusted its price target to $47.00.
Q: What does Lamb Weston expect for the rest of the year?
Lamb Weston expects its net sales and profits (EBITDA) to be higher for the full year. However, they plan to spend less money on new buildings and equipment (capital expenditures) in 2026.
Q: Why is Lamb Weston important for McDonald's?
Lamb Weston is a major supplier of frozen potato products, like fries, to McDonald's. When Lamb Weston has problems, it could affect the supply and cost of fries for McDonald's customers.