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Lamb Weston's (LW) Latest Expansion Effort to Accelerate Growth
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Lamb Weston Holdings, Inc. (LW - Free Report) signed an agreement to buy the remaining equity interests in its European joint venture with Meijer Frozen Foods B.V. The deal is priced at €700 million on a cash and common stock basis. Post the deal’s conclusion, Lamb Weston will own 100% stake in Lamb-Weston/Meijer v.o.f. Management expects to close the transaction during the second half of fiscal 2023.
The acquisition will give LW the ownership of additional five production facilities globally. Apart from this, the company will own a sixth manufacturing unit via 75% interest in a joint venture in Austria.
We note that Lamb-Weston/Meijer is among the top suppliers of frozen potato products across Europe, the Middle East and Africa. The entity generated net sales of almost €954 million in fiscal 2022. Management highlighted that the joint venture had been a solid platform driving the company’s growth across Europe and the Middle East while supporting its global customer base in key international markets.
All said, the acquisition is in sync with LW’s capital allocation and acquisition framework. The move will solidify Lamb Weston’s manufacturing footprint to better serve its customers and tap into growth opportunities across Europe, the Middle East and Africa.
Lamb Weston’s sturdy balance sheet and capacity to generate cash keep it well-placed to boost production capacity and fuel long-term growth. For 13 weeks ended Aug 28, 2022, the company’s capital expenditures (including IT expenditure) amounted to $121.2 million, as it continues to construct new French fry lines in Idaho and China. For fiscal 2023, the company expects cash for capital expenditures in the band of $475-$525 million.
Lamb Weston’s efforts to boost offerings and expand capacity enable the company to meet rising demand conditions for snacks and fries. In September 2022, Lamb Weston unveiled expansion plans for french fry processing capacity in Argentina with the construction of a new manufacturing unit in Mar del Plata, Buenos Aires. In July 2021, the company announced the expansion plan for french fry processing capacity at its existing American Falls, ID facility — with an envisioned capacity to manufacture more than 350 million pounds of frozen french fries and other potato products annually. In March 2021, the company unveiled plans to build a new french fry processing facility in Ulanqab, Inner Mongolia, China.
Such well-chalked expansion efforts, including the latest acquisition, will likely keep supporting Lamb Weston’s growth story.
Lancaster Colony, which manufactures and markets food products for the retail and foodservice markets, currently sports a Zacks Rank of 1. LANC delivered an earnings surprise of 170% in the last reported quarter.
The Zacks Consensus Estimate for Lancaster Colony’s current financial year sales and earnings per share (EPS) suggests growth of 9.6% and 38.3%, respectively, from the corresponding year-ago reported figures.
TreeHouse Foods, which manufactures and distributes private label foods and beverages, sports a Zacks Rank #1 at present. TreeHouse Foods has a trailing four-quarter earnings surprise of 45.2%, on average.
The Zacks Consensus Estimate for THS’ current financial-year sales and EPS suggests growth of 16.8% and 15.1%, respectively, from the year-ago reported numbers.
J. M. Smucker, which manufactures and markets branded food and beverage products, carries a Zacks Rank #2 (Buy). J. M. Smucker delivered a trailing four-quarter earnings surprise of 20.8%, on average.
The Zacks Consensus Estimate for SJM’s current financial year sales suggests growth of 4.4% from the year-ago period’s reported figure.
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Lamb Weston's (LW) Latest Expansion Effort to Accelerate Growth
Lamb Weston Holdings, Inc. (LW - Free Report) signed an agreement to buy the remaining equity interests in its European joint venture with Meijer Frozen Foods B.V. The deal is priced at €700 million on a cash and common stock basis. Post the deal’s conclusion, Lamb Weston will own 100% stake in Lamb-Weston/Meijer v.o.f. Management expects to close the transaction during the second half of fiscal 2023.
The acquisition will give LW the ownership of additional five production facilities globally. Apart from this, the company will own a sixth manufacturing unit via 75% interest in a joint venture in Austria.
We note that Lamb-Weston/Meijer is among the top suppliers of frozen potato products across Europe, the Middle East and Africa. The entity generated net sales of almost €954 million in fiscal 2022. Management highlighted that the joint venture had been a solid platform driving the company’s growth across Europe and the Middle East while supporting its global customer base in key international markets.
All said, the acquisition is in sync with LW’s capital allocation and acquisition framework. The move will solidify Lamb Weston’s manufacturing footprint to better serve its customers and tap into growth opportunities across Europe, the Middle East and Africa.
The Zacks Rank #1(Strong Buy) stock has gained 21.2% in the past six months against the industry’s 8.9% decline. You can see the complete list of today’s Zacks #1 Rank stocks here.
Image Source: Zacks Investment Research
Efforts to Boost Capacity
Lamb Weston’s sturdy balance sheet and capacity to generate cash keep it well-placed to boost production capacity and fuel long-term growth. For 13 weeks ended Aug 28, 2022, the company’s capital expenditures (including IT expenditure) amounted to $121.2 million, as it continues to construct new French fry lines in Idaho and China. For fiscal 2023, the company expects cash for capital expenditures in the band of $475-$525 million.
Lamb Weston’s efforts to boost offerings and expand capacity enable the company to meet rising demand conditions for snacks and fries. In September 2022, Lamb Weston unveiled expansion plans for french fry processing capacity in Argentina with the construction of a new manufacturing unit in Mar del Plata, Buenos Aires. In July 2021, the company announced the expansion plan for french fry processing capacity at its existing American Falls, ID facility — with an envisioned capacity to manufacture more than 350 million pounds of frozen french fries and other potato products annually. In March 2021, the company unveiled plans to build a new french fry processing facility in Ulanqab, Inner Mongolia, China.
Such well-chalked expansion efforts, including the latest acquisition, will likely keep supporting Lamb Weston’s growth story.
Other Solid Food Bets
Some other top-ranked stocks are Lancaster Colony (LANC - Free Report) , TreeHouse Foods (THS - Free Report) and The J. M. Smucker (SJM - Free Report) .
Lancaster Colony, which manufactures and markets food products for the retail and foodservice markets, currently sports a Zacks Rank of 1. LANC delivered an earnings surprise of 170% in the last reported quarter.
The Zacks Consensus Estimate for Lancaster Colony’s current financial year sales and earnings per share (EPS) suggests growth of 9.6% and 38.3%, respectively, from the corresponding year-ago reported figures.
TreeHouse Foods, which manufactures and distributes private label foods and beverages, sports a Zacks Rank #1 at present. TreeHouse Foods has a trailing four-quarter earnings surprise of 45.2%, on average.
The Zacks Consensus Estimate for THS’ current financial-year sales and EPS suggests growth of 16.8% and 15.1%, respectively, from the year-ago reported numbers.
J. M. Smucker, which manufactures and markets branded food and beverage products, carries a Zacks Rank #2 (Buy). J. M. Smucker delivered a trailing four-quarter earnings surprise of 20.8%, on average.
The Zacks Consensus Estimate for SJM’s current financial year sales suggests growth of 4.4% from the year-ago period’s reported figure.