French fry stock sizzles, rising 10% amid massive selloff

Finance

French fry stock sizzles, rising 10% amid massive selloff

Lamb Weston (NYSE:LW) was among the top gainers in an otherwise brutal day for stocks, rising more than 10% to $60 per share.

The company, which makes frozen French fries, was relatively immune to the damage created throughout the stock market after President Donald Trump announced sweeping tariffs.

The Dow ended down 1,637 or 3.8% while the S&P 500 fell 274 points or 4.8%. The Nasdaq dropped 1.050 points or 6% while the Russell 2000 plummeted 135 points or 6.6%.

But investors were buying Lamb Weston stock after it beat earnings estimates for its fiscal third quarter of 2025.

Lamb Weston generated $1.52 billion in net sales in the quarter, up 4% year-over-year. This was better than $1.5 billion forecast from analysts.

Net income for the quarter was $146 million, or $1.02 per share. which was basically flat year-over-year. Adjusted earnings were $1.10 per share, which was 8% lower than the same quarter a year ago. However, it was far better than estimates of 89 cents per share.

The company was able to reduce selling, general and administrative (SG&A) expenses by $16 million in the quarter to $164 million. However, that was partially offset by costs related to its restructuring plan announced last fall.

We remain on track to achieve our goal of reducing capital spending by $250 million this year compared with the prior fiscal year. In addition, we expect to deliver a further $200 million

in capital spending reductions in fiscal 2026 as we complete our growth-related investments, leading to $450 million in total reductions compared to fiscal 2024, Lamb Weston President and CEO Mike Smith said.

Consultant hired for value creation and cost savings

Looking ahead, the company sees headwinds from expected soft restaurant traffic. But it will continue to streamline costs and investing strategically.

It has also hired strategic consultant AlixPartners to evaluate both near- and long-term opportunities for “value creation” and cost savings.

Smith said the company is “working with urgency” and intends to provide updates on this initiative as its work with AlixPartners progresses.

Officials reaffirmed its outlook for the rest of the fiscal year, calling for net sales in the range of $6.35 billion to $6.45 billion; adjusted EBITDA in the range of $1.17 billion to $1.21 billion; and adjusted net Income of $440 million to $460 million. Further, the adjusted diluted EPS is targeted at $3.05 to $3.20.

Lamb Weston also lowered its projections for adjusted SG&A expenses, from $680 million to $690 million to $665 million to $675 million.

Further, it anticipates cash used for capital expenditures, excluding acquisitions, of approximately $750 million.

The firm points out that the guidance does not factor in any impact from potential import tariffs by the U.S. government or potential retaliatory tariffs.

Lamb Weston stock is down about 10% YTD and 40% over the past year. Yet, its not particularly cheap with a P/E of 21 and a forward P/E of 14.

Analysts have a median price target of $65 on the stock, which would suggest 9% upside. Im not sure its quite the value yet, but it does seem to be headed in the right direction.