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Lifeway Foods Inc. Stock Upgraded (LWAY)

NEW YORK ( TheStreet) -- Lifeway Foods (Nasdaq: LWAY) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 22.9%. Since the same quarter one year prior, revenues rose by 21.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Although LWAY's debt-to-equity ratio of 0.24 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.45, which illustrates the ability to avoid short-term cash problems.
  • LIFEWAY FOODS INC has improved earnings per share by 20.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, LIFEWAY FOODS INC reported lower earnings of $0.22 versus $0.33 in the prior year. This year, the market expects an improvement in earnings ($0.30 versus $0.22).
  • Net operating cash flow has slightly increased to $1.75 million or 3.07% when compared to the same quarter last year. Despite an increase in cash flow of 3.07%, LIFEWAY FOODS INC is still growing at a significantly lower rate than the industry average of 502.58%.
  • 37.50% is the gross profit margin for LIFEWAY FOODS INC which we consider to be strong. Regardless of LWAY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.80% trails the industry average.

Lifeway Foods, Inc. and its subsidiaries engage in the production and sale of dairy and non-dairy health food products. The company has a P/E ratio of 52.5, below the average food & beverage industry P/E ratio of 55.4 and above the S&P 500 P/E ratio of 17.7. Lifeway has a market cap of $163.9 million and is part of the consumer goods sector and food & beverage industry. Shares are down 0.6% year to date as of the close of trading on Thursday.

You can view the full Lifeway Ratings Report or get investment ideas from our investment research center.

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