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Stockchase InsightsLamb WestonLWBUYSep 08, 2023

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

LW produces and distributes frozen potato products globally and is now trading at 18.4x times' Forward P/E. In the last few years, LW’s revenue grew at a healthy double-digit rate. The balance sheet is leveraged, with a net debt of $3.3B, net debt/EBITDA is around 2.9x. The company has been reinvesting quite heavily to grow organically over the last few years. The debt adds risk, but considering the business it is probably at a manageable level. We would not like to see it increase, though. LW also pays consistently increasing dividends, which we like. Overall, a solid consumer staple name, debt is high, but the business is quite stable to support the leverage, ROE (113%!) is a bit inaccurate metric to use here, we prefer to use Return on total capital (26.7%) (debt + equity), we think that metrics reflect the return of the underlying business more accurately.
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Stock price when the opinion was issued

$45.08

As of Jun 18, 2026. Market Open.

food processing

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BUY

They delivered a great quarter and shares trade cheaply.

HOLD

They make frozen potatoes. Shares are up 37% this year. Excellent earnings, beating 48.5% on average in the past four quarters. It's a re-opening play, selling mostly to restaurants. It trades at 29x earnings. LW can't repeat this success in 2023. Don't sell it though.

COMMENT

It reports Wednesday. It has been flirting with 52-week highs lately. In this market, their upside will tread water or go marginally higher.

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