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Lamb Weston Raises Fiscal-Year Outlook, Stock Soars

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Andrew R. Michaud

• October 05, 2023

Lamb Weston Holdings, the renowned frozen potato products manufacturer, has experienced a significant boost in its stock value following an optimistic revision of its fiscal-year outlook. On the other hand, Clorox, a prominent player in the cleaning products industry, has witnessed a decline in its stock price due to a disappointing forecast prompted by a cyberattack in August.

Lamb Weston Raises Earnings and Sales Projections

Lamb Weston (ticker: LW) recently announced that it anticipates earning between $5.47 and $5.92 per share for fiscal year 2024. This outlook marks an improvement from their previous estimation of $4.95 to $5.40 per share. Furthermore, the french fry manufacturer expects their sales to range between $6.8 billion and $7 billion, surpassing the previous guidance of $6.7 billion to $6.9 billion.

"We have revised our earnings target for the year to reflect our outstanding performance this quarter, as well as the strong demand and favorable pricing environment," stated Chief Executive Tom Werner in a press release.

During the first quarter, Lamb Weston reported earnings of $1.63 per share, generating $1.67 billion in revenue. These figures exceeded analysts' consensus of $1.08 per share on revenue of $1.62 billion. The company experienced a remarkable 48% increase in sales compared to the same period last year, largely driven by a 23% rise in price/mix.

Lamb Weston Stock Skyrockets

With the positive news pushing investors' confidence, shares of Lamb Weston climbed by an impressive 8.4%, reaching $98.13. This surge represents the largest percentage increase since January 5th, according to Dow Jones Market Data. So far this year, the stock has achieved a remarkable growth of 9.8%, making it the top performer in the S&P 500 on Thursday.

Clorox Faces Challenges

In stark contrast, Clorox (CLX) endured a challenging day. As another key player in the consumer goods sector, the company experienced adverse consequences amidst their struggles.

Clorox Expects Decreased Sales and Earnings Due to Cybersecurity Attack

Clorox, the maker of disinfectant wipes, recently announced in a press release that it anticipates a decline in net sales for the fiscal first quarter, which ended on September 30. The company expects a decrease between 23% and 28% compared to the previous year. Additionally, Clorox predicts that their adjusted earnings for the same period will either remain flat or drop by 40 cents per share.

The decline in sales and earnings is a direct result of a cybersecurity attack that Clorox disclosed in August. This attack had a widespread impact on the company's operations, causing significant disruptions, including order processing delays and product outages.

As a consequence of these developments, Raymond James analyst Olivia Tong downgraded Clorox shares to Market Perform from Outperform. She also removed her previous $185 price target on the stock. In a research note, Tong explained that although Clorox reported shipment and consumption were on track prior to the attack, rebuilding their pipeline and regaining lost market share may require additional time and resources. This could potentially lead to continued sales loss at retail, potentially necessitating increased promotional efforts.

The negative effects of this announcement are reflected in Clorox's stock performance. Shares of the company tumbled 8.5% to $120.65, making it the lowest close since June 2018. This decrease represents the largest percentage drop since February 2022. Overall, Clorox's stock has seen a decline of 14% this year, making it the worst-performing stock in the S&P 500 on Thursday.