Lamb Weston authorized $750 million to buy back their own stock. Management paid an average of fifty eight dollars per share. The stock now trades at forty two. Four companies control 97% of the frozen potato market. The global frozen potato TAM is projected to grow from sixty eight billion to one hundred twelve billion by 2035. This is not a turnaround bet. This is a consolidated industry at a twenty eight percent discount to what insiders paid.
Why did LW stock fall 60% if the business has a moat?
Consumers traded down from branded to private label fries. Volume rose 8% while price mix fell eight percent. The market saw margin compression and sold the stock. But Lamb Weston makes both the branded and the private label fries. They win either way. The industry structure does not change.
What makes the frozen potato market a structural moat?
Lamb Weston and McCain control seventy percent of the market. Add Simplot and Cavendish, and four companies control ninety seven percent. A single processing line costs two hundred forty to four hundred fifteen million dollars. The industry consolidated over twenty years through acquisitions that eliminated competition. New entrants face capital requirements measured in billions and long term contracts already locked up by incumbents.
Why is management buying back stock at these prices?
The board authorized a seven hundred fifty million dollar repurchase program. In the first half of fiscal 2025, management bought 1.4 million shares at an average of $58. The stock now trades at forty two, a twenty eight percent discount to insider purchases. The dividend increased. Cost savings of one hundred million are targeted for fiscal 2026. The signals point one direction.
What is the upside if restaurant traffic recovers?
Analysts average a sixty four dollar price target, implying 54% upside from current levels. The dividend yield of three point six percent is the highest in company history. The Argentina facility opened in October 2025, adding two hundred million pounds of annual capacity with eighty percent of volume exported to Brazil. While the US market digests trade down, the moat expands into emerging markets where fry consumption per capita is still growing.
Lamb Weston does not need restaurant traffic to recover tomorrow. It needs the structural advantage it has held for decades to remain intact. Four companies control ninety seven percent of the market. Processing plants cost hundreds of millions. The frozen potato business consolidated over twenty years into an industry with pricing power and barriers that new competitors cannot overcome. Management is buying. The dividend is growing. The cost structure is improving. LW stock offers what rarely appears in public markets: a dominant position in an essential industry, available at a discount because perception changed faster than reality.