The risk/reward is asymmetric. Lamb Weston is at its lowest valuation. Either the industry's long-term growth prospects are broken, and there is a structural change in its competitive intensity, or the shares are set up for a double.
Two adverse developments were known but not quantified during FQ3: 1) ERP issues leading to missed sales and 2) the slowdown in the QSR sector, highlighted by McDonald’s weakening trends. The concern going forward is whether there is growth left for the industry and whether it will require lower margins to fill capacity.
Has Lamb Weston and the industry taken too much price? Is Lamb Weston over-earning? Will capacity additions undermine pricing? Our Black Book presentation will explore QSR and the broader restaurant industry's growth trends and outlook, industry pricing, competitive dynamics, potato inventories, modeling details, and more.
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To watch the replay and to download the materials: CLICK HERE |
Our investment themes from the call:
