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1. Company Snapshot

1.a. Company Description

Lifeway 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.

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1.b. Last Insights on LWAY

Lifeway Foods' recent performance has been driven by robust growth, with estimated net sales of $39.1 million for Q3-to-date through August, representing a 20% year-over-year growth. The company's strategic Waukesha expansion, which doubles its production capacity, has been completed, further solidifying its kefir category leadership. Additionally, the launch of Muscle Mates, a functional beverage with creatine, protein, and probiotics, is expected to disrupt the fitness nutrition category. These developments have positioned Lifeway for continued growth and expansion in the functional dairy market.

1.c. Company Highlights

2. LifeWay Foods' Q3 2025 Earnings: A Record-Breaking Quarter

LifeWay Foods reported a record-breaking third quarter with net sales of $57.1 million, a 24% increase year-over-year and 29% increase on a comparable basis. The company's gross profit margin expanded to 28.7%, up 300 basis points from last year, driven by the strong demand for its flagship products. Net income was $3.5 million, or 23¢ per basic and diluted share, compared to $3 million or 20¢ per basic and 19¢ per diluted share last year. The actual EPS of $0.23 was below estimates of $0.28. Analysts estimate next year's revenue growth at 13.2%, indicating a continued growth trajectory.

Publication Date: Nov -20

📋 Highlights
  • Record Q3 Sales Growth:: Net sales reached $57.1M, up 24% YoY and 29% on a comparable basis, driven by flagship lightweight keeper and high-protein farmer cheese demand.
  • YTD Sales Surge:: Year-to-date sales hit $157.1M, reflecting 123% growth since 2019, with recognition as 33rd on Time’s 2026 Growth Leader list.
  • Profitability Expansion:: Gross margin rose 300 bps to 28.7%, and net income grew to $3.5M (23¢/share) from $3M (20¢/share) in 2024.
  • Manufacturing Investment:: $45M allocated for Waukesha facility upgrades, aiming to double capacity by 2026, with $9M already invested.

Drivers of Growth

The company's growth is driven by its lightweight portfolio, which is positioned at the intersection of consumer trends, including protein-rich probiotic functional foods and nutrient-dense foods. As Julie Smolansky, President and CEO, noted, the company's growth trajectory is consistent and sustainable, with year-to-date net sales of $157.1 million, a 123% increase compared to the same period six years ago in 2019. LifeWay is investing in marketing efforts and manufacturing capabilities to support accelerating velocities and growing demand.

Investment in Capacity Expansion

LifeWay is investing over $45 million in modernizing its state-of-the-art Waukesha facility, with plans to double manufacturing capacity and enhance operation efficiencies by 2026. The company has already invested over $9 million in this project. This investment is expected to support the company's continued growth and expansion into new markets.

Valuation and Outlook

With a P/E Ratio of 31.82 and an EV/EBITDA of 16.1, the market is pricing in a significant growth premium for LifeWay Foods. The company's ROE of 14.32% and ROIC of 9.93% indicate a strong return on equity and invested capital. LifeWay is well-positioned to deliver its strongest annual sales in company history in 2025 and is reiterating its target to achieve between $45 and $50 million in adjusted fiscal year 2027.

3. NewsRoom

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The Law Offices of Frank R. Cruz Announces Investigation of Lifeway Foods, Inc. (LWAY) on Behalf of Investors

Dec -03

Source: businesswire.com

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Leading U.S. Kefir Brand Lifeway Foods Named to Inc.'s 2025 Best in Business List in Best Challenger Brands Category

Dec -03

Source: prnewswire.com

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Edward Smolyansky Issues Shareholder Letter Regarding Lifeway Foods, Inc. Misleading and False Public Statements (NASDAQ: LWAY)

Dec -03

Source: prnewswire.com

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Lifeway Issues Letter to Shareholders Regarding Dissident Director Nominees, Revealing Disqualifying Track Records and Ethical Failures

Dec -02

Source: globenewswire.com

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Boston Partners Sells 9,380 Shares of Lifeway Foods, Inc. $LWAY

Dec -01

Source: defenseworld.net

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Edward Smolyansky Files Preliminary Proxy Statement toward Achieving Further Board Change and a New Beginning for Lifeway Foods, Inc. (NASDAQ: LWAY)

Nov -26

Source: prnewswire.com

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Kefir-Leader Lifeway Foods Expands Farmer Cheese Distribution to 2,000 Walmart Stores Across the U.S.

Nov -21

Source: prnewswire.com

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Lifeway Foods: The Market Is Still Getting It Wrong

Nov -17

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (9.92%)

6. Segments

Drinkable Kefir Other than ProBugs

Expected Growth: 10%

Increasing health awareness, rising demand for probiotics, and growing popularity of functional beverages drive the 10% growth of Drinkable Kefir Other than ProBugs from Lifeway Foods, Inc. Additionally, expanding distribution channels, innovative flavors, and marketing efforts contribute to the segment's rapid expansion.

Cheese

Expected Growth: 9%

Lifeway Foods, Inc.'s cheese segment growth is driven by increasing demand for probiotic and organic products, expanding distribution channels, and strategic partnerships. Additionally, the company's focus on innovation, such as introducing new flavors and products, contributes to its 9% growth rate.

Cream and Other

Expected Growth: 8%

Lifeway Foods' Cream and Other segment growth is driven by increasing demand for artisanal and specialty dairy products, expansion into new distribution channels, and strategic partnerships. Additionally, the company's focus on innovation, quality, and sustainability resonates with health-conscious consumers, contributing to an 8% growth rate.

Drinkable Yogurt

Expected Growth: 12%

Lifeway Foods' drinkable yogurt growth is driven by increasing demand for probiotic-rich, healthy beverages, particularly among health-conscious millennials and Gen Z consumers. Expanding distribution channels, innovative flavors, and strategic marketing efforts also contribute to the 12% growth rate.

ProBugs Kefir

Expected Growth: 11%

ProBugs Kefir's 11% growth is driven by increasing demand for healthy, convenient, and kid-friendly beverages. Parents seek high-protein, low-sugar options, and ProBugs' fun packaging appeals to children. Expanding distribution channels, online presence, and strategic marketing campaigns also contribute to growth, as consumers become more aware of kefir's probiotic benefits and digestive health advantages.

Other Dairy

Expected Growth: 10%

Lifeway Foods' Other Dairy segment growth is driven by increasing demand for probiotic and functional dairy products, expanding distribution channels, and strategic marketing efforts. Additionally, the company's focus on innovation, such as introducing new flavors and products, has contributed to the 10% growth rate.

7. Detailed Products

Kefir

A fermented milk drink that contains a variety of beneficial bacteria and yeast, supporting gut health and immune system

Kefir Cheese

A type of cheese made from kefir, high in protein and low in lactose, suitable for those with dairy intolerance

Probiotic Supplements

Dietary supplements containing live cultures of beneficial bacteria, supporting gut health and immune system

Frozen Kefir

A frozen dessert made from kefir, high in protein and low in sugar, suitable for health-conscious consumers

Kefir-Based Snacks

A range of snacks made from kefir, including bars, bites, and puffs, high in protein and low in sugar

8. Lifeway Foods, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Lifeway Foods, Inc. is medium due to the availability of alternative products in the market, such as plant-based yogurt and other dairy-free products.

Bargaining Power Of Customers

The bargaining power of customers for Lifeway Foods, Inc. is low due to the company's strong brand reputation and customer loyalty.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Lifeway Foods, Inc. is medium due to the company's dependence on a few key suppliers for high-quality milk and other ingredients.

Threat Of New Entrants

The threat of new entrants for Lifeway Foods, Inc. is high due to the growing demand for healthy and organic food products, making it an attractive market for new entrants.

Intensity Of Rivalry

The intensity of rivalry for Lifeway Foods, Inc. is high due to the competitive nature of the food and beverage industry, with many established players and new entrants vying for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 4.44%
Debt Cost 10.47%
Equity Weight 95.56%
Equity Cost 10.47%
WACC 10.47%
Leverage 4.64%

11. Quality Control: Lifeway Foods, Inc. passed 9 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Seneca Foods

A-Score: 6.1/10

Value: 7.1

Growth: 7.2

Quality: 4.4

Yield: 0.0

Momentum: 10.0

Volatility: 7.7

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John B. Sanfilippo & Son

A-Score: 5.2/10

Value: 7.3

Growth: 4.4

Quality: 6.1

Yield: 6.0

Momentum: 0.5

Volatility: 7.0

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Nature's Sunshine Products

A-Score: 5.0/10

Value: 6.5

Growth: 4.1

Quality: 6.5

Yield: 1.0

Momentum: 7.0

Volatility: 5.0

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LifeVantage

A-Score: 4.6/10

Value: 7.0

Growth: 4.6

Quality: 7.3

Yield: 5.0

Momentum: 1.0

Volatility: 2.7

1-Year Total Return ->

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Mama's Creations

A-Score: 4.6/10

Value: 0.6

Growth: 8.8

Quality: 5.9

Yield: 0.0

Momentum: 8.5

Volatility: 3.7

1-Year Total Return ->

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Lifeway Foods

A-Score: 4.2/10

Value: 2.2

Growth: 8.2

Quality: 6.2

Yield: 0.0

Momentum: 5.0

Volatility: 3.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

23.92$

Current Price

23.92$

Potential

-0.00%

Expected Cash-Flows