Lifeway Foods (NASDAQ:LWAY) Releases Earnings Results, Misses Estimates By $0.25 EPS

Key Points

• Lifeway Foods missed earnings estimates: Second-quarter EPS was $0.01 versus analysts’ $0.26 forecast, although revenue of $66.9 million exceeded expectations of $61.4 million.
• Sales growth remained strong but profitability weakened: Revenue increased 24.1% year over year, marking the 27th consecutive quarter of growth, while inflation in milk, resin and transportation costs compressed gross margin to 19.5%.
• Growth investments continue despite a sharp stock decline: Product distribution is expanding across major retailers and the Waukesha facility expansion remains on track for early 2027; shares fell 14.9% to $24.86 after the results.

Lifeway Foods (NASDAQ:LWAY - Get Free Report) released its earnings results on Thursday. The company reported $0.01 earnings per share (EPS) for the quarter, missing analysts' consensus estimates of $0.26 by ($0.25), FiscalAI reports. The company had revenue of $66.89 million during the quarter, compared to analysts' expectations of $61.40 million. Lifeway Foods had a return on equity of 17.76% and a net margin of 6.54%.

Here are the key takeaways from Lifeway Foods' conference call:

• Record sales continued: Second-quarter net sales rose 24.1% year over year to $66.9 million, marking the 27th consecutive quarter of growth. First-half sales increased 29.9% to $129.9 million, led by Lifeway Kefir and Farmer Cheese.
• Profitability was pressured by inflation: Gross margin fell to 19.5% amid elevated milk prices, higher resin costs, and oil-related transportation expenses. Second-quarter net income was only $0.1 million, or $0.01 per share, and management expects dairy costs to remain a headwind in the third quarter.
• Distribution is expanding: Muscle Mates, Farmer Cheese, Kefir Butter, and other products secured additional placements at Walmart, Kroger, Target, Wegmans, Meijer, and regional retailers, while new food-service channels are broadening consumer trial opportunities.
• Capacity investments support future growth: The Waukesha facility expansion remains on track for completion in early 2027, which management expects will increase production capacity, improve efficiency, and provide flexibility to serve rising retail and food-service demand.

Lifeway Foods Stock Down 14.9%

LWAY traded down $4.36 during trading on Thursday, reaching $24.86. The company had a trading volume of 466,494 shares, compared to its average volume of 111,138. The company has a market cap of $379.91 million, a P/E ratio of 25.63 and a beta of 0.44. Lifeway Foods has a 12 month low of $17.31 and a 12 month high of $34.20. The company has a debt-to-equity ratio of 0.08, a current ratio of 2.14 and a quick ratio of 1.56. The business's fifty day moving average price is $28.93 and its 200 day moving average price is $25.01.

Analyst Ratings Changes

LWAY has been the subject of a number of research analyst reports. Weiss Ratings raised shares of Lifeway Foods from a "hold (c+)" rating to a "buy (b-)" rating in a research note on Tuesday, July 28th. Benchmark restated a "buy" rating on shares of Lifeway Foods in a research report on Monday, June 15th. Two analysts have rated the stock with a Buy rating, According to MarketBeat, Lifeway Foods presently has a consensus rating of "Buy" and an average target price of $35.00.

Insiders Place Their Bets

In other news, major shareholder Ludmila Smolyansky sold 100,000 shares of the business's stock in a transaction dated Wednesday, July 22nd. The stock was sold at an average price of $30.11, for a total value of $3,011,000.00. Following the sale, the insider directly owned 507,207 shares in the company, valued at $15,272,002.77. The trade was a 16.47% decrease in their ownership of the stock. The sale was disclosed in a document filed with the SEC, which is available at the SEC website. Also, major shareholder Edward Smolyansky sold 39,098 shares of the stock in a transaction dated Tuesday, July 7th. The stock was sold at an average price of $29.41, for a total value of $1,149,872.18. Following the transaction, the insider owned 1,071,709 shares of the company's stock, valued at approximately $31,518,961.69. The trade was a 3.52% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. Over the last 90 days, insiders have sold 526,698 shares of company stock worth $15,245,397. 18.58% of the stock is currently owned by company insiders.

Institutional Inflows and Outflows

Hedge funds have recently added to or reduced their stakes in the business. Rhumbline Advisers increased its position in Lifeway Foods by 8.2% during the first quarter. Rhumbline Advisers now owns 6,068 shares of the company's stock worth $148,000 after buying an additional 462 shares during the last quarter. Alliancebernstein L.P. raised its holdings in Lifeway Foods by 5.7% in the 3rd quarter. Alliancebernstein L.P. now owns 9,250 shares of the company's stock valued at $257,000 after acquiring an additional 500 shares during the period. Barclays PLC lifted its position in Lifeway Foods by 9.0% during the fourth quarter. Barclays PLC now owns 8,009 shares of the company's stock worth $194,000 after acquiring an additional 659 shares during the last quarter. First Trust Advisors LP boosted its holdings in shares of Lifeway Foods by 6.8% during the second quarter. First Trust Advisors LP now owns 17,178 shares of the company's stock worth $423,000 after acquiring an additional 1,091 shares during the period. Finally, Larson Financial Group LLC bought a new position in shares of Lifeway Foods during the third quarter worth approximately $31,000. Institutional investors own 36.39% of the company's stock.

Lifeway Foods Company Profile

Lifeway Foods, Inc NASDAQ: LWAY is a Chicago-based food company specializing in probiotic-rich cultured dairy products. Established in 1986 by Michael Smolyansky, the company pioneered the introduction of kefir to the U.S. market. Under the leadership of CEO Julie Smolyansky, who succeeded her father in 2002, Lifeway has grown from a single product operation into a diversified portfolio of fermented foods and beverages aimed at promoting digestive health and wellness.

The company's flagship product is kefir, a cultured milk beverage naturally rich in probiotics, vitamins and minerals.

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