Potato products company Lamb Weston (NYSE: LW) reported Q4 CY2025 results topping the market’s revenue expectations, with sales up 1.1% year on year to $1.62 billion. On the other hand, the company’s full-year revenue guidance of $6.45 billion at the midpoint came in 1% below analysts’ estimates. Its non-GAAP profit of $0.69 per share was 6.4% above analysts’ consensus estimates.
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Lamb Weston (LW) Q4 CY2025 Highlights:
- Revenue: $1.62 billion vs analyst estimates of $1.59 billion (1.1% year-on-year growth, 1.8% beat)
- Adjusted EPS: $0.69 vs analyst estimates of $0.65 (6.4% beat)
- Adjusted EBITDA: $285.7 million vs analyst estimates of $273.4 million (17.7% margin, 4.5% beat)
- The company reconfirmed its revenue guidance for the full year of $6.45 billion at the midpoint
- EBITDA guidance for the full year is $1.1 billion at the midpoint, below analyst estimates of $1.19 billion
- Operating Margin: 8.6%, up from 1.2% in the same quarter last year
- Free Cash Flow was $101 million, up from -$49.6 million in the same quarter last year
- Organic Revenue rose 1% year on year vs analyst estimates of 1.5% declines (254 basis point beat)
- Sales Volumes rose 8% year on year (-6% in the same quarter last year)
- Market Capitalization: $8.27 billion
Company Overview
Best known for its Grown in Idaho brand, Lamb Weston (NYSE: LW) produces and distributes potato products such as frozen french fries and mashed potatoes.
Revenue Growth
A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.
With $6.47 billion in revenue over the past 12 months, Lamb Weston is one of the larger consumer staples companies and benefits from a well-known brand that influences purchasing decisions.
As you can see below, Lamb Weston’s 12.8% annualized revenue growth over the last three years was solid as consumers bought more of its products.
This quarter, Lamb Weston reported modest year-on-year revenue growth of 1.1% but beat Wall Street’s estimates by 1.8%.
Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months, a deceleration versus the last three years. This projection is underwhelming and implies its products will face some demand challenges.
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Volume Growth
Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.
To analyze whether Lamb Weston generated its growth from changes in price or volume, we can compare its volume growth to its organic revenue growth, which excludes non-fundamental impacts on company financials like mergers and currency fluctuations.
Over the last two years, Lamb Weston’s average quarterly volume growth was a healthy 3.3%. In the context of its 1.3% average organic revenue growth, we can see that most of the company’s gains have come from more customers purchasing its products.
In Lamb Weston’s Q4 2026, sales volumes jumped 8% year on year. This result was an acceleration from its historical levels, certainly a positive signal.
Key Takeaways from Lamb Weston’s Q4 Results
We enjoyed seeing Lamb Weston beat analysts’ organic revenue expectations this quarter. We were also glad its EBITDA outperformed Wall Street’s estimates. On the other hand, its gross margin missed and full-year EBITDA guidance fell short of Wall Street’s estimates. The latter is weighing on shares. The market seemed to be hoping for more, and the stock traded down 9.6% to $53.63 immediately following the results.
Big picture, is Lamb Weston a buy here and now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.
