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Lifeway Foods (LWAY)
NASDAQ:LWAY
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Lifeway Foods
(NASDAQ:LWAY)
Rating:68Neutral
Price Target:
$24.50
▲( 9.38% Upside)
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 (LWAY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$340.55M
Dividend YieldN/A
Average Volume (3M)45.20K
Price to Earnings (P/E)33.7
Beta (1Y)0.36
Revenue Growth12.84%
EPS Growth-22.88%
CountryUS
Employees291
SectorConsumer Defensive
Sector Strength73
IndustryPackaged Foods
Share Statistics
EPS (TTM)0.23
Shares Outstanding15,203,241
10 Day Avg. Volume66,496
30 Day Avg. Volume45,197
Financial Highlights & Ratios
PEG Ratio2.89
Price to Book (P/B)4.46
Price to Sales (P/S)0.00
P/FCF Ratio70.73
Enterprise Value/Market Cap0.94
Enterprise Value/Revenue0.44
Enterprise Value/Gross Profit6.71
Enterprise Value/Ebitda4.15
Forecast
1Y Price Target
$28.00Price Target Upside25.00% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
Lifeway Foods Business Overview & Revenue Model
Company DescriptionLifeway 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 MoneyLifeway 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 demonstrates strong revenue growth and a robust balance sheet, with minimal debt and significant equity. However, challenges in cash flow management reduce the overall financial performance score.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 2024.85
Very Positive
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.90
Very Positive
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.60
Neutral
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 188.28M | 186.82M | 160.12M | 141.57M | 119.06M | 102.03M | Gross Profit |
| 47.94M | 48.57M | 42.44M | 26.79M | 28.71M | 26.93M | EBIT |
| 11.86M | 13.85M | 17.00M | 2.35M | 5.88M | 4.92M | EBITDA |
| 14.68M | 17.46M | 20.20M | 5.08M | 8.61M | 8.19M | Net Income Common Stockholders |
| 10.14M | 9.03M | 11.37M | 924.00K | 3.31M | 3.23M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 19.45M | 16.73M | 13.20M | 4.44M | 9.23M | 7.93M | Total Assets |
| 93.67M | 90.55M | 81.65M | 69.00M | 70.87M | 60.07M | Total Debt |
| 68.00K | 117.00K | 2.92M | 6.68M | 7.46M | 3.11M | Net Debt |
| -19.38M | -16.61M | -10.27M | 2.23M | -1.77M | -4.81M | Total Liabilities |
| 19.50M | 18.64M | 21.22M | 21.43M | 21.74M | 13.21M | Stockholders Equity |
| 74.17M | 71.91M | 60.44M | 47.57M | 49.13M | 46.85M |
| Cash Flow | Free Cash Flow | ||||
| 4.82M | 6.26M | 12.59M | 538.00K | 3.64M | 4.49M | Operating Cash Flow |
| 11.27M | 12.96M | 16.94M | 3.99M | 5.56M | 6.38M | Investing Cash Flow |
| -1.28M | -6.68M | -4.41M | -4.03M | -7.14M | -1.89M | Financing Cash Flow |
| -2.56M | -2.75M | -3.78M | -4.75M | 2.88M | -405.00K |
Lifeway Foods Technical Analysis
Negative
22.40
Price Trends
23.44
Negative
22.86
Negative
22.97
Negative
Market Momentum
-0.32
Positive
42.68
Neutral
33.44
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LWAY, the sentiment is Negative. The current price of 22.4 is below the 20-day moving average (MA) of 23.12, below the 50-day MA of 23.44, and below the 200-day MA of 22.97, indicating a bearish trend. The MACD of -0.32 indicates Positive momentum. The RSI at 42.68 is Neutral, neither overbought nor oversold. The STOCH value of 33.44 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LWAY.
Lifeway Foods Risk Analysis
Lifeway Foods disclosed 20 risk factors in its most recent earnings report. Lifeway Foods reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 3 New Risks
1.
The actions of certain of our stockholders could cause us to incur significant expense, disrupt our business, result in a proxy contest or litigation and adversely impact our stock price. Q4, 2024
2.
Litigation regarding the Stockholders' Agreement may be protracted and costly. Q4, 2024
3.
Our shareholder rights plan includes terms and conditions that could discourage a takeover or other transaction that stockholders may consider favorable. Q4, 2024
Lifeway Foods Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $261.87M | 26.66 | 6.42% | ― | 2.00% | -37.09% | |
69 Neutral | $267.70M | 75.83 | 16.69% | ― | 19.41% | -43.88% | |
68 Neutral | $340.55M | 33.73 | 14.73% | ― | 12.84% | -22.88% | |
64 Neutral | $8.82B | 14.56 | 4.78% | 173.92% | 3.50% | 2.20% | |
58 Neutral | $74.52M | ― | -7.38% | ― | 25.04% | 87.51% | |
58 Neutral | $677.04M | ― | -5.95% | ― | 2.44% | 91.41% | |
43 Neutral | $168.77M | ― | -31.83% | ― | -8.50% | -186.18% |
* Consumer Defensive Sector Average
Performance Comparison
LWAY
Lifeway Foods
22.40
6.92
44.70%
NATR
Nature's Sunshine Products
14.27
-1.16
-7.52%
STKL
SunOpta
5.76
0.56
10.77%
HAIN
Hain Celestial
1.87
-5.05
-72.98%
MAMA
Mama's Creations
7.12
0.24
3.49%
LSF
Laird Superfood
7.05
4.48
174.32%
Lifeway Foods Earnings Call Summary
Earnings Call Date:May 13, 2025
(Q1-2025)
| % Change Since: -8.23%|
Next Earnings Date:Aug 18, 2025
Earnings Call Sentiment Positive
The call highlighted strong sales growth, successful strategic investments, and significant distribution expansion, despite facing some inflationary pressures and increased expenses. The overall performance and strategic positioning suggest a positive outlook for the company.Q1-2025 Updates
Positive Updates
Consistent Net Sales Growth
Net sales increased by $1.5 million or 3.3% compared to Q1 2024, marking the 22nd consecutive quarter of net sales growth.
Strong Volume Growth
On a like-for-like basis, Lifeway achieved greater than 10% volume-led growth in the quarter.
Record High Week of Sales
Achieved a Lifeway record high week of sales at the end of April, surpassing $5 million in gross sales, representing a 35% increase from the same week in the prior year.
Increased Gross Profit Margin
Reported a gross profit margin of 24%, benefiting from heightened volumes of Lifeway branded products.
Successful Strategic Investments
Net income of $3.5 million, driven by a net gain from early investment into Simple Mills, which was acquired by Flower Foods.
Expansion of Production Capacity
Developed a state-of-the-art facility in Waukesha, Wisconsin, expected to nearly double production capacity and more than triple bottling speed.
Significant Distribution Expansion
Expanded distribution into 1,400 Albertsons stores, and additional commitments from almost 1,000 new stores including CVS, Target, and Amazon Fresh.
Innovative New Product Offerings
Introduced new products like lactose-free Kefir flavor fusions and Probiotic Smoothies with Collagen, receiving positive consumer feedback.
Negative Updates
Inflationary Pricing Pressures
Faced headwinds from continued inflationary pricing in milk, the largest raw material.
Increased SG&A Expenses
Selling and general administrative expenses were $9.3 million, reflecting increased investments in sales and marketing.
Company Guidance
During the Lifeway Foods First Quarter 2025 Conference Call, Julie Smolyansky, President and CEO, reported a 3.3% increase in net sales, reaching $46.1 million compared to the first quarter of 2024, primarily due to higher volumes of Lifeway branded drinkable Kefir and Farmer's Cheese. Despite strategic changes in retail and distributor relationships, the company achieved over 10% volume-led growth on a like-for-like basis. Lifeway's gross profit margin was 24%, benefiting from increased volumes while facing inflationary pressures on milk and promotional expenses. Selling, general, and administrative expenses totaled $9.3 million, reflecting strategic investments in sales and marketing. The company reported a net income of $3.5 million, with an EPS of $0.23, boosted by gains from an early investment in Simple Mills. Capital expenditure decreased slightly to $2.2 million, aligning with expectations as Lifeway enhances its production capacity. The call highlighted a record high sales week in April, a 35% increase from the prior year, fueled by demand for its core products. Lifeway reiterated its expectation to achieve $45 to $50 million in adjusted EBITDA by fiscal year 2027, driven by sustained consumer interest in health and wellness trends.Lifeway Foods Corporate Events
Business Operations and StrategyFinancial Disclosures
Lifeway Foods Achieves Record Weekly Sales Growth
Positive
Apr 30, 2025
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.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.