Summary Lifeway is the U.S. leader in kefir, a probiotic yogurt beverage. LWAY has multiplied revenues by 16x since 2000. Unfortunately, all that improvement has been offset by decreasing gross margins. Profitability has not grown in line with revenues. The company could only justify its current price based on margin recovery (never seen) or acquisition from a competitor (improbable). Even assigning the margin recovery scenario as the base, LWAY stock is only fairly valued. The situation could change if the company announced and implemented measures to recover profitability. Anna Puzatykh/iStock via Getty Images Lifeway Foods (NASDAQ: LWAY ) is the leading manufacturer of kefir yogurt in the U.S. More generally, the company competes in the probiotics segment. The company has seen tremendous revenue growth in the past two decades, but unfortunately, it has been at the expense of gross margins, more than halving them in the process. This has meant that the company is not increasing profits even though it consistently sells more. Recently, the company’s founder-family and largest shareholders initiated a family feud that could end in a change of control or at least a managerial change. I prefer not to speculate on such changes before they occur […]
K&X Design and Investment Technology, LLC
Invest The Invisible Impact
K&X Design and Investment Technology, LLC
Invest The Invisible Impact
