Lifeway Foods (LWAY) AI Stock Analysis

• Market Cap: $360.01M
• Dividend Yield: N/A
• Average Volume (3M): 55.86K
• Price to Earnings (P/E): 40.0
• Beta (1Y): 0.47
• Revenue Growth: 16.67%
• EPS Growth: -20.96%
• Country: US
• Employees: 291
• Sector: Consumer Defensive
• Sector Strength: 89
• Industry: Packaged Foods
• EPS (TTM): 0.59
• Shares Outstanding: 15,203,241
• 10 Day Avg. Volume: 31,376
• 30 Day Avg. Volume: 55,858
• PEG Ratio: 0.37
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 0.98
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 7.24
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $28.00
• Price Target Upside: 18.09% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1

Lifeway Foods' strong revenue growth and solid balance sheet are significant strengths. However, cash flow challenges and high valuation pose risks. Recent corporate achievements add positive sentiment. Overall, the stock presents a balanced outlook with potential growth tempered by financial management challenges.

Positive Factors

Market Expansion

The company is expanding its SKUs into the high-growth RTD market with new on-trend flavors which we believe will introduce the brand to new customers.

Product Popularity

Lifeway's flagship kefir product saw revenue growth of 14% in Q4’24 and 20% in FY24, demonstrating the brand's strength and consumer interest in functional foods like probiotics.

Revenue Growth

Double-digit revenue growth is expected to continue on a full-year basis, supported by tapering milk prices and modest GM expansion.

Negative Factors

Financial Impact

GAAP earnings were skewed by year-end bonuses and expenses associated with the unsolicited takeover attempt by Danone.

Operational Costs

Elevated SG&A costs in FY24 were associated with legal/advisory fees due to the unsolicited Danone acquisition and other shareholder actions.

Revenue Miss

Q3’24 revenue growth of 13% missed our 18% estimate and moved down $3M sequentially as Q2’24 results appear to have uniquely benefited from club channel distribution, while GMs were compressed on elevated milk prices.

Lifeway Foods Business Overview & Revenue Model

Company Description

Lifeway Foods, Inc. produces and markets probiotic-based products in the United States and internationally. Its primary product is drinkable kefir, a cultured dairy product in various organic and non-organic sizes, flavors, and types, including low fat, non-fat, whole milk, protein, and BioKefir. The company also offers European-style soft cheeses; cream and other products; ProBugs, a line of kefir products designed for children; cupped kefir and Icelandic Skyr, a line of strained kefir and yogurt products; and frozen kefir in soft serve and pint-size containers. It sells its products under the Lifeway and Fresh Made brand names, as well as under private labels on behalf of customers primarily through direct sales force, brokers, and distributors. The company was founded in 1986 and is based in Morton Grove, Illinois.

How the Company Makes Money

Lifeway Foods generates revenue through the sale of its products across multiple distribution channels, including retail stores, health food outlets, and direct-to-consumer online platforms. The company's key revenue streams are derived from its flagship kefir products, which are available in various forms and flavors to cater to a wide range of consumer preferences. Additionally, Lifeway Foods benefits from strategic partnerships and distribution agreements that help expand its market reach domestically and internationally. The company's earnings are significantly influenced by its ability to maintain product quality, drive innovation in new product development, and respond to consumer trends towards healthier eating options.

Lifeway Foods Financial Statement Overview

Summary

Lifeway Foods has demonstrated strong revenue growth and maintains a robust balance sheet with minimal leverage. However, cash flow management poses challenges, with zero free cash flow in 2024 and declining cash flow ratios, indicating a need for improved cash generation.

Income Statement

Lifeway Foods has demonstrated strong revenue growth, increasing from $93.66 million in 2019 to $186.82 million in 2024. The company has maintained a healthy gross profit margin, reaching 26% in 2024, indicating efficient cost management. However, the net profit margin has seen some fluctuations, dropping to 4.8% in 2024 from 7.1% in 2023, which suggests potential challenges in controlling non-operating expenses. The EBIT and EBITDA margins also reflect strong operational performance, with 7.4% each in 2024.

Balance Sheet

Lifeway Foods maintains a robust balance sheet, evidenced by a low debt-to-equity ratio of 0.001 in 2024, indicating minimal leverage and financial risk. The equity ratio stands at 79.4%, demonstrating significant equity financing. Return on equity has remained solid at 12.5% in 2024, although it has declined from 18.8% in 2023, suggesting some pressure on profitability relative to shareholders' equity.

Cash Flow

Lifeway Foods' cash flow performance shows areas for improvement. The operating cash flow to net income ratio was 0 in 2024, down from 1.49 in 2023, indicating challenges in converting income into cash. Free cash flow was also zero in 2024, impacted by capital expenditures and investing activities. The company needs to focus on enhancing cash generation and managing capital expenditures effectively.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
186.82M	160.12M	141.57M	119.06M	102.03M
	Gross Profit
48.57M	42.44M	26.79M	28.71M	26.93M
	EBIT
13.85M	17.00M	2.35M	5.88M	4.92M
	EBITDA
13.85M	20.20M	5.08M	8.61M	8.19M
	Net Income Common Stockholders
9.03M	11.37M	924.00K	3.31M	3.23M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
16.73M	13.20M	4.44M	9.23M	7.93M
	Total Assets
90.55M	81.65M	69.00M	70.87M	60.07M
	Total Debt
117.00K	2.92M	6.68M	7.46M	3.11M
	Net Debt
-16.61M	-10.27M	2.23M	-1.77M	-4.81M
	Total Liabilities
18.64M	21.22M	21.43M	21.74M	13.21M
	Stockholders Equity
71.91M	60.44M	47.57M	49.13M	46.85M
Cash Flow		Free Cash Flow
6.26M	12.59M	538.00K	3.64M	4.49M
	Operating Cash Flow
12.96M	16.94M	3.99M	5.56M	6.38M
	Investing Cash Flow
-6.68M	-4.41M	-4.03M	-7.14M	-1.89M
	Financing Cash Flow
-2.75M	-3.78M	-4.75M	2.88M	-405.00K

Lifeway Foods Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 23.71
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LWAY, the sentiment is Positive. The current price of 23.71 is above the 20-day moving average (MA) of 23.64, above the 50-day MA of 22.79, and above the 200-day MA of 22.03, indicating a bullish trend. The MACD of 0.09 indicates Positive momentum. The RSI at 53.28 is Neutral, neither overbought nor oversold. The STOCH value of 53.89 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for LWAY.

Lifeway Foods Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
LWAY	71 Outperform	$360.01M	39.97	13.64%	―	16.67%	-20.96%
MAMA	69 Neutral	$248.13M	70.29	16.69%	―	19.41%	-43.88%
Sector *	64 Neutral	$9.01B	14.73	3.76%	178.62%	3.83%	6.05%
NATR	64 Neutral	$227.72M	30.50	4.98%	―	2.03%	-47.76%
STKL	58 Neutral	$506.49M	―	-6.77%	―	-5.50%	89.98%
LSF	49 Neutral	$60.25M	―	-13.68%	―	26.50%	82.92%
HAIN	45 Neutral	$263.52M	―	-19.41%	―	-6.68%	-9.71%

Lifeway Foods Corporate Events

Lifeway Foods Achieves Record Weekly Sales Growth

On April 29, 2025, Lifeway Foods announced a significant achievement of surpassing $5 million in gross sales for the week ending April 27, 2025, marking a 35% increase from the previous year. This milestone highlights the growing demand for Lifeway’s kefir and farmer cheese products, potentially strengthening the company’s market position and signaling positive implications for stakeholders ahead of their first quarter 2025 financial results announcement on May 13, 2025.

Spark’s Take on LWAY Stock

According to Spark, TipRanks’ AI Analyst, LWAY is a Outperform.

Lifeway Foods exhibits strong financial performance with notable revenue growth and a solid balance sheet, yet faces challenges in cash flow management. The technical analysis suggests moderate upward momentum, although the lack of comprehensive momentum indicators adds uncertainty. The company appears overvalued, with no dividend yield to entice income-focused investors. The recent corporate event involving a gain from an investment sale adds a positive note, contributing to a balanced overall stock score.

To see Spark’s full report on LWAY stock, click here.

Lifeway Foods Addresses Misstatements in Press Release

On February 14, 2025, Lifeway Foods’ legal counsel addressed a letter to Edward and Ludmila Smolyansky’s counsel regarding alleged misstatements and omissions they made in a press release. The letter clarifies that the Board of Directors, not the Compensation Committee, discussed Julie Smolyansky’s retention bonus, and Julie was not involved in the decision-making process. The letter emphasizes that the allegations of a proxy war involving the company are unfounded and that the issues in question are personal family matters unrelated to the company’s operations. It also addresses the claim about the independence of directors and the sale of Edward’s shares, attributing the latter’s failure to sell shares to his own actions rather than the company’s interference.

Lifeway Foods to Gain $5M from Simple Mills Sale

On February 11, 2025, Lifeway Foods announced it expects to gain approximately $5 million from the sale of Simple Mills to Flowers Foods, following its early investment in Simple Mills in 2015. This transaction, pending regulatory approval and expected to close in the first quarter of 2025, will bring Lifeway’s total proceeds from this investment to around $6.5 million. The company congratulated Simple Mills and reaffirmed its support for its CEO, Julie Smolyansky, who was instrumental in the initial investment decision.