As of June 21, 2025, Lamb Weston Holdings Inc has a Discounted Cash Flow (DCF) derived fair value of $88.77 per share. With the current market price at $53.53, this represents a potential upside of 65.8%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $72.80 |
| DCF Fair Value (10-year) | $88.77 |
| Potential Upside (5-year) | 36.0% |
| Potential Upside (10-year) | 65.8% |
| Discount Rate (WACC) | 5.8% - 7.6% |
Revenue is projected to grow from $6468 million in 05-2024 to $10924 million by 05-2034, representing a compound annual growth rate of approximately 5.4%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 05-2024 | 6468 | 21% |
| 05-2025 | 6377 | -1% |
| 05-2026 | 6704 | 5% |
| 05-2027 | 7298 | 9% |
| 05-2028 | 7728 | 6% |
| 05-2029 | 8065 | 4% |
| 05-2030 | 8702 | 8% |
| 05-2031 | 9162 | 5% |
| 05-2032 | 9822 | 7% |
| 05-2033 | 10307 | 5% |
| 05-2034 | 10924 | 6% |
Net profit margin is expected to improve from 11% in 05-2024 to 11% by 05-2034, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 05-2024 | 700 | 11% |
| 05-2025 | 684 | 11% |
| 05-2026 | 719 | 11% |
| 05-2027 | 783 | 11% |
| 05-2028 | 829 | 11% |
| 05-2029 | 865 | 11% |
| 05-2030 | 934 | 11% |
| 05-2031 | 983 | 11% |
| 05-2032 | 1054 | 11% |
| 05-2033 | 1106 | 11% |
| 05-2034 | 1172 | 11% |
with a 5-year average of $481 million. Projected CapEx is expected to maintain at approximately 9% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 05-2025 | 558 |
| 05-2026 | 650 |
| 05-2027 | 725 |
| 05-2028 | 721 |
| 05-2029 | 673 |
| 05-2030 | 716 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 44 |
| Days Inventory | 80 |
| Days Payables | 56 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 3M/2025 | 404 | 58 | 148 | 4 | 194 |
| 2026 | 1761 | 244 | 624 | 98 | 796 |
| 2027 | 1934 | 266 | 679 | 60 | 929 |
| 2028 | 2002 | 281 | 719 | 85 | 917 |
| 2029 | 2010 | 294 | 750 | 63 | 903 |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 72.80 | 36.0% |
| 10-Year DCF (Growth) | 88.77 | 65.8% |
| 5-Year DCF (EBITDA) | 96.73 | 80.7% |
| 10-Year DCF (EBITDA) | 114.63 | 114.1% |
Is Lamb Weston Holdings Inc (LW) a buy or a sell? Lamb Weston Holdings Inc is definitely a buy. Based on our DCF analysis, Lamb Weston Holdings Inc (LW) appears to be significantly undervalued with upside potential of 65.8%. The company's strong projected growth in revenue and profitability, coupled with consistent capital expenditure, supports our positive outlook on its intrinsic value.
Key investment drivers include:
Investors should consider a strong buy at the current market price of $53.53.