Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model. 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 compelling growth in net income, robust revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.
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- The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Food Products industry average. The net income increased by 36.1% when compared to the same quarter one year prior, rising from $1.03 million to $1.40 million.
- LWAY's revenue growth trails the industry average of 44.3%. Since the same quarter one year prior, revenues rose by 16.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- LWAY's debt-to-equity ratio is very low at 0.15 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, LWAY has a quick ratio of 1.88, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has increased to $1.96 million or 12.55% when compared to the same quarter last year. In addition, LIFEWAY FOODS INC has also vastly surpassed the industry average cash flow growth rate of -46.28%.
- 38.20% is the gross profit margin for LIFEWAY FOODS INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 6.79% trails the industry average.
-- Written by a member of TheStreet Ratings Staff