Lamb Weston Holdings Inc (LW)
Profitability ratios
Return on sales
| May 31, 2025 | May 31, 2024 | May 26, 2024 | May 31, 2023 | May 28, 2023 | |
|---|---|---|---|---|---|
| Gross profit margin | 21.68% | 27.32% | 27.34% | 26.77% | 26.66% |
| Operating profit margin | 10.31% | 16.47% | 16.49% | 16.49% | 16.42% |
| Pretax margin | 7.52% | 14.77% | 14.79% | 23.05% | 22.97% |
| Net profit margin | 5.54% | 11.22% | 11.23% | 18.86% | 18.78% |
The profitability ratios for Lamb Weston Holdings Inc. indicate a declining trend over the analyzed periods, reflecting potential challenges in maintaining previous levels of profitability.
Gross Profit Margin:
The gross profit margin shows a slight increase from approximately 26.66% on May 28, 2023, to around 27.34% on May 26, 2024, suggesting marginal improvement in core manufacturing or sourcing efficiencies. However, by May 31, 2025, the gross margin drops to approximately 21.68%, representing a notable decrease that may be attributable to increased costs of goods sold or pricing pressures.
Operating Profit Margin:
Similarly, the operating profit margin remains relatively stable between May 28 and May 31, 2023, at approximately 16.42-16.49%. It then maintains a consistent level into May 26 and May 31, 2024, at around 16.49% and 16.47%, respectively. In May 2025, this ratio declines significantly to approximately 10.31%, indicating a reduction in operational efficiency or increased operating expenses impacting profitability at the operating level.
Pretax Margin:
The pretax profit margin begins near 23% in May 2023, slightly rising to about 23.05% on May 31, 2023, but then declines sharply to roughly 14.79% by May 26, 2024, and remains almost unchanged into May 31, 2024. By May 2025, the pretax margin reduces sharply to 7.52%, reflecting a substantial compression of pre-tax earnings relative to revenues, likely driven by increased costs, lower margins, or other financial pressures.
Net Profit Margin:
The net profit margin follows a similar pattern, starting at approximately 18.78% on May 28, 2023, and slightly increasing to 18.86% on May 31, 2023. It then declines considerably to around 11.23% in May 2024, remaining stable into the same period in 2024. By May 2025, the net profit margin drops sharply to approximately 5.54%, indicating a significant reduction in bottom-line profitability, potentially impacted by higher expenses, reduced sales, or other extraordinary items.
Overall, the company's profitability metrics depict a downward trend over the analyzed periods. The declining margins across gross profit, operating income, pretax income, and net income suggest increasing cost pressures, pricing challenges, or operational inefficiencies that have adversely affected the company's ability to sustain higher profitability levels.
Return on investment
| May 31, 2025 | May 31, 2024 | May 26, 2024 | May 31, 2023 | May 28, 2023 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 9.00% | 14.46% | 14.46% | 13.53% | 13.53% |
| Return on assets (ROA) | 4.83% | 9.85% | 9.85% | 15.47% | 15.47% |
| Return on total capital | 38.27% | 59.59% | 59.59% | 62.50% | 62.50% |
| Return on equity (ROE) | 20.56% | 40.58% | 40.58% | 71.49% | 71.49% |
The profitability ratios of Lamb Weston Holdings Inc. demonstrate notable variations across the specified periods, indicating shifts in operational efficiency and overall financial performance.
Operating Return on Assets (Operating ROA) remained stable at 13.53% from May 28, 2023, through May 31, 2023, before experiencing an increase to 14.46% by May 26, 2024, and maintaining that level through May 31, 2024. However, by May 31, 2025, the Operating ROA declined substantially to 9.00%. This decline suggests a decrease in the company's efficiency in generating operating income from its assets during the most recent period.
Return on Assets (ROA) followed a similar pattern, starting at 15.47% on May 28, 2023, and remaining unchanged through May 31, 2023. A significant decrease is observed by May 26, 2024, with ROA dropping to 9.85%, and further declining to 4.83% by May 31, 2025. The downward trend indicates reduced overall profitability in relation to total assets, potentially reflecting operational challenges or asset base performance.
Return on Total Capital exhibited a high level of profitability at 62.50% in both May 28 and May 31, 2023. It decreased slightly to 59.59% by May 26, 2024, and remained stable through May 31, 2024. By May 31, 2025, this ratio declined more significantly to 38.27%, highlighting a reduction in the company's ability to generate returns from its total capital investment over the period.
Return on Equity (ROE) was robust at 71.49% for both May 28 and May 31, 2023. A notable decline occurred by May 26, 2024, when ROE decreased to 40.58%, and further dropped to 20.56% by May 31, 2025. This significant reduction indicates a decrease in the company's ability to generate profits for shareholders, possibly due to declining net income or changes in equity levels.
Overall, these profitability ratios reveal a pattern of declining profitability metrics from mid-2024 through 2025, suggesting potential challenges in operational efficiency, asset utilization, and shareholder return. While prior periods exhibited strong profitability indicators, recent figures indicate a substantial reduction in the company's ability to generate profits relative to its assets, capital, and equity.