Report by Hedgeye
It is déjà vu all over again - questioning the secular growth of French fries is back. Following LW's recent earnings miss, the stock is trading at its lowest valuation since being spun off from Conagra. However, Hedgeye’s analysis points to an asymmetric risk/reward from current levels. Out year EPS power is between $7-8, meaning the stock can double from here over the next 1-2 years. They believe the current price underestimates the industry’s pricing discipline, underestimates the returns from capacity expansions and overestimates the pricing impact from capacity growth.