Is Lamb Weston Stock Built to Withstand More Downside?
Lamb Weston (LW) stock is down 31.7% in 21 trading days. The recent slide reflects renewed concerns around weak restaurant traffic and pricing pressures, especially in Europe, but sharp drops like this often raise a tougher question: is the weakness temporary, or a sign of deeper cracks in the story?
Before judging its downturn reslience, let’s look at where Lamb Weston stands today.
- Size: Lamb Weston is a $5.8 Bil company with $6.5 Bil in revenue currently trading at $41.30.
- Fundamentals: Last 12 month revenue growth of 2.3% and operating margin of 12.4%.
- Liquidity: Has Debt to Equity ratio of 0.69 and Cash to Assets ratio of 0.01
- Valuation: Lamb Weston stock is currently trading at P/E multiple of 14.7 and P/EBIT multiple of 7.9
- Has returned (median) 7.9% within a year following sharp dips since 2010. See LW Dip Buy Analysis.
These metrics point to a Weak operational performance, alongside Low valuation – making the stock Risky. For details, see Buy or Sell LW Stock
That brings us to the key consideration for investors worried about this fall: how resilient is LW stock if markets turn south? This is where our downturn resilience framework comes in. Suppose LW stock falls another 20-30% to $29 – can investors comfortably hold on? Turns out, the stock has fared worse than the S&P 500 index during various economic downturns, based on (a) how much the stock fell and, (b) how quickly it recovered. Below, we dive deeper into each such downturn.
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2022 Inflation Shock
- LW stock fell 41.8% from a high of $85.80 on 5 March 2021 to $49.96 on 14 March 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 31 October 2022
- Since then, the stock increased to a high of $115.12 on 4 July 2023 , and currently trades at $41.30
| LW | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -41.8% | -25.4% |
| Time to Full Recovery | 231 days | 464 days |
2020 Covid Pandemic
- LW stock fell 53.1% from a high of $95.87 on 18 February 2020 to $45.01 on 18 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 5 January 2023
| LW | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -53.1% | -33.9% |
| Time to Full Recovery | 1,023 days | 148 days |
2018 Correction
- LW stock fell 29.3% from a high of $83.35 on 13 November 2018 to $58.97 on 18 June 2019 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 18 November 2019
| LW | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -29.3% | -19.8% |
| Time to Full Recovery | 153 days | 120 days |
Feeling jittery about LW stock? Consider portfolio approach.
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