LW – Market expectations are for Uniform ROA to improve, but management may have concerns about pricing, labor constraints, and growth
- Lamb Weston Holdings, Inc. (LW) currently trades above corporate and historical averages relative to Uniform earnings, with a 31.1x Uniform P/E (Fwd. V/E’).
- At these levels, markets are pricing in expectations for Uniform ROA to improve to 16%, accompanied by 3% Uniform asset growth.
- Meanwhile, analysts expect Uniform ROA to remain stable at 11% levels through 2023, accompanied by 4% Uniform asset growth.
- If sustained going forward, these levels would imply a stock price closer to $44, representing approximately 35% equity downside for the firm.
- Moreover, the firm’s most recent earnings call suggests management may have concerns about pricing, labor constraints, and growth.