Value
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 6.2 |
| P/S | 9.7 |
| EV/EBITDA | 6.6 |
| Fwd P/E | 8.0 |
| PEG | 6.9 |
| Analyst target | 3.0 |
- ▸Forward P/E: 14.9x
- ▸PEG: 1.02
LW · Why this verdict
Why Lamb Weston Holdings (LW) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score4.9/10
ConfidenceHIGH
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
A packaged-food business with a perfect four-quarter earnings beat record and exceptional cash generation has risen slightly above its near-term resistance target within a confirmed technical downtrend, carries a dividend payout of 335% of earnings, and shows very weak revenue growth of roughly 3% — the cash conversion is real but the current price already reflects the positives.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Free cash flow stands at roughly 199% of net income — a standout cash generation metric well above reported earnings — but the absence of a competitive moat and below-average margins limit the structural durability of that cash advantage, keeping overall quality at the lower end of acceptable territory. Quality breakdown | Free cash flow conversion remains above 100% of net income for 4 consecutive quarters, confirming the cash generation as a durable characteristic rather than a one-period anomaly. | →Stable |
| CounterWithout a competitive moat, pricing pressure from peers could compress margins and erode the superior cash conversion ratio that currently underpins the investment case — the free cash flow strength may be more cyclical than structural. | ||
The dividend payout stands at 335% of reported earnings — a level that is structurally uncovered by net income alone — though the strong free cash flow conversion of 199% of net income may partially support the payout through actual cash generated above accounting profits. Catalyst breakdown | Earnings per share grows or the dividend is adjusted such that the payout ratio falls below 150% within 4 quarters. | →Stable |
| CounterGiven free cash flow at roughly 199% of net income, the company may be generating enough actual cash to fund the dividend even though the accounting-based payout ratio looks extreme — the free cash flow story partially rehabilitates the sustainability concern. | ||
The stock has moved roughly 0.8% above its near-term resistance target, leaving a slightly negative risk/reward, while the 200-day moving average is declining at a confirmed pace and the RSI at 72 signals an overbought condition within what technicals characterize as a bear market rally — a combination that limits further upside and raises the probability of a pullback. Price targets | The stock pulls back below $42 and subsequently holds above a rising 200-day moving average for at least 4 consecutive weeks, restoring a favorable risk/reward of at least 1.5-to-1. | →Stable |
| CounterA stock outrunning its resistance target on improving MACD and rising volume accumulation may be re-rating to a higher analyst target; if the earnings beat streak continues, the resistance level itself may be revised upward. | ||
Earnings have beaten analyst estimates in all four of the last four reported quarters with an average positive surprise of roughly 25%, suggesting a consistent pattern of setting expectations conservatively relative to actual delivery. Catalyst breakdown | A fifth consecutive EPS beat with a positive surprise in the next reported quarter. | →Stable |
| CounterFour straight beats averaging 25% typically raise analyst models to a more demanding level; with revenue growing at only roughly 3%, delivering a fifth beat may become progressively more difficult as the business lacks a strong organic growth driver to keep exceeding recalibrated estimates. | ||
Free cash flow stands at roughly 199% of net income — a standout cash generation metric well above reported earnings — but the absence of a competitive moat and below-average margins limit the structural durability of that cash advantage, keeping overall quality at the lower end of acceptable territory.
→StableQuality breakdown
- Expectation
- Free cash flow conversion remains above 100% of net income for 4 consecutive quarters, confirming the cash generation as a durable characteristic rather than a one-period anomaly.
CounterWithout a competitive moat, pricing pressure from peers could compress margins and erode the superior cash conversion ratio that currently underpins the investment case — the free cash flow strength may be more cyclical than structural.
The dividend payout stands at 335% of reported earnings — a level that is structurally uncovered by net income alone — though the strong free cash flow conversion of 199% of net income may partially support the payout through actual cash generated above accounting profits.
→StableCatalyst breakdown
- Expectation
- Earnings per share grows or the dividend is adjusted such that the payout ratio falls below 150% within 4 quarters.
CounterGiven free cash flow at roughly 199% of net income, the company may be generating enough actual cash to fund the dividend even though the accounting-based payout ratio looks extreme — the free cash flow story partially rehabilitates the sustainability concern.
The stock has moved roughly 0.8% above its near-term resistance target, leaving a slightly negative risk/reward, while the 200-day moving average is declining at a confirmed pace and the RSI at 72 signals an overbought condition within what technicals characterize as a bear market rally — a combination that limits further upside and raises the probability of a pullback.
→StablePrice targets
- Expectation
- The stock pulls back below $42 and subsequently holds above a rising 200-day moving average for at least 4 consecutive weeks, restoring a favorable risk/reward of at least 1.5-to-1.
CounterA stock outrunning its resistance target on improving MACD and rising volume accumulation may be re-rating to a higher analyst target; if the earnings beat streak continues, the resistance level itself may be revised upward.
Earnings have beaten analyst estimates in all four of the last four reported quarters with an average positive surprise of roughly 25%, suggesting a consistent pattern of setting expectations conservatively relative to actual delivery.
→StableCatalyst breakdown
- Expectation
- A fifth consecutive EPS beat with a positive surprise in the next reported quarter.
CounterFour straight beats averaging 25% typically raise analyst models to a more demanding level; with revenue growing at only roughly 3%, delivering a fifth beat may become progressively more difficult as the business lacks a strong organic growth driver to keep exceeding recalibrated estimates.
Per-dimension breakdown
Quality
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 5.8 |
| ROA | 4.2 |
| Gross margin | 0.1 |
| Op margin | 4.4 |
| Net margin | 2.3 |
| Current ratio | 5.4 |
| FCF quality | 10.0 |
| Moat | 4.2 |
| Piotroski F | 4.4 |
- ▸Excellent cash conversion: 199% FCF/NI
- ▸No competitive moat
Growth
1.6/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.2 |
| EPS growth | 0.0 |
Momentum
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.1 |
| MACD | 9.2 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 2.8 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -3.2%/30d — confirmed downtrend
Sentiment
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.1 |
| Price target | 5.3 |
| erm sentiment | 4.6 |
Insider
7.0/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 8.0 |
| insider conviction | 8.0 |
| holder change | 5.1 |
- ▸Notable insider buying — $16,983,271 (0.274% of mkt cap)
Peer rank
3.4/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.8 |
| quality rank | 5.7 |
| growth rank | 5.0 |
Technical
2.1/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.2 |
| support resistance | 1.2 |
| 52w position | 3.9 |
Risk (lower is worse)
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.1 |
| days to cover | 6.2 |
| volatility | 5.6 |
| put call | 5.8 |
| implied vol | 5.4 |
| beta | 10.0 |
| debt equity | 2.8 |
Catalyst
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 6.0 |
- ▸Perfect beat streak: 4Q
- ▸Dividend: 339.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- MOMENTUM:6.2>=5.5
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:28d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-1.2=NEGATIVE
Warning (2)
- INSIDER:0.27%=MODERATE
- DEATH_CROSS:momentum=6.2>=5.0 recovering
Reward-to-Risk
-1.17
Upside
-11.5%
Downside
9.8%
Sizing output
AVOID
SetupRECOVERY — Death cross but MACD improving, RSI 69
EdgeCATALYST — Earnings in 28d with 4/4 beat streak
SuitabilityMODERATE — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 3.4 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Catalyst at 7.2) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-1.2=NEGATIVE) reinforce the read. Current asymmetry R:R is -1.17 — supplementary context, not the trigger for this path.
The strongest dimensions are Catalyst at 7.2, Insider at 7.0, and Value at 6.6; the weakest are Growth at 1.6, Technical at 2.1, and Peer rank at 3.4. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of -1.17 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1The stock has moved roughly 0.8% above its near-term resistance target, leaving a slightly negative risk/reward, while the 200-day moving average is declining at a confirmed pace and the RSI at 72 signals an overbought condition within what technicals characterize as a bear market rally — a combination that limits further upside and raises the probability of a pullback.
Trip ifStock closes and holds above a rising 200-day moving average for 4 consecutive weeks with a new analyst price target above $50 confirmed.
- P2Free cash flow stands at roughly 199% of net income — a standout cash generation metric well above reported earnings — but the absence of a competitive moat and below-average margins limit the structural durability of that cash advantage, keeping overall quality at the lower end of acceptable territory.
Trip ifFree cash flow falls below 100% of net income for 2 consecutive reported quarters.
- P3Earnings have beaten analyst estimates in all four of the last four reported quarters with an average positive surprise of roughly 25%, suggesting a consistent pattern of setting expectations conservatively relative to actual delivery.
Trip ifEPS surprise falls below 0% for 2 consecutive reported quarters.
- P4The dividend payout stands at 335% of reported earnings — a level that is structurally uncovered by net income alone — though the strong free cash flow conversion of 199% of net income may partially support the payout through actual cash generated above accounting profits.
Trip ifEarnings per share exceeds the annual dividend per share for 2 consecutive quarters, bringing the earnings-based payout ratio below 100%.