Lifeway Foods Q1 Earnings Miss, Sales Beat Estimates

Lifeway Foods, Inc. LWAY posted first-quarter 2024 results, wherein the top line beat the Zacks Consensus Estimate, while the bottom line missed the same. Both net sales and earnings experienced a year-over-year increase.
Amid macro headwinds, LWAY has notably achieved a significant boost in net sales, particularly driven by strategic sales and marketing investments. These investments are evidently driving volume growth and increasing awareness among consumers. Lifeway Foods has achieved 18th consecutive quarter of growth and reported fourth consecutive quarter of record sales.
The company has demonstrated remarkable strength on the back of strong operational execution, favorable transportation cost, gross margin expansion and net income growth. These strategic initiatives position it well to capitalize on emerging opportunities and further solidify its position in the market.
The Zacks Rank #2 (Buy) company's shares have rallied 115.1% in the past three months compared with the industry's growth of 22.2%

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Q1 Details

Lifeway Foods, the leading producer of probiotic-based products, delivered earnings of 16 cents per share, which missed the Zacks Consensus Estimate of 24 cents. However, the figure increased from earnings of 6 cents in the same period last year.
Net sales of $44.6 million jumped 17.8% from $37.9 million in the prior-year quarter. Net sales also beat the Zacks Consensus Estimate of $43 million. The uptick was attributable to increased sales volumes of branded drinkable kefir.
Gross profit of $11.5 million witnessed a significant improvement of 40.2% year over year. Gross margin of 25.8% expanded 410 basis points from 21.7% in the year-earlier quarter. Higher volumes of Lifeway branded products and the favorable impact of transportation costs played a key role in driving growth.
SG&A expenses of $7.8 million increased 17.8% from $6.7 million a year ago.

Other Financial Aspects

LWAY ended the quarter with cash and cash equivalents of $12 million and total stockholders' equity of $63.5 million. Net cash provided by operating activities amounted to $1.5 million.

Here, we have highlighted three other top-ranked stocks, namely, Tyson Foods TSN, Hormel Foods HRL and Colgate-Palmolive Company CL.
Tyson Foods, which operates through the Beef, Pork, Chicken and Prepared Foods segments, currently carries a Zacks Rank #2. TSN delivered an average earnings surprise of 24.4% in the trailing four quarters.
The Zacks Consensus Estimate for Tyson Foods' current fiscal-year sales and earnings calls for growth of 0.03% and 85.1%, respectively, from the year-ago reported numbers.
Hormel Foods develops, processes and distributes various meat, nuts and other food products. It currently carries a Zacks Rank #2. HRL has a trailing four-quarter earnings surprise of 3.5%, on average.
The Zacks Consensus Estimate for Hormel Foods' current financial-year sales suggests growth of 1.2% from the prior-year levels.
Colgate, a general manufacturer and retailer of consumer products, currently carries a Zacks Rank #2. CL has a trailing four-quarter earnings surprise of 4.4%, on average.
The Zacks Consensus Estimate for CL's current fiscal-year earnings and sales suggests growth of 9.3% and 3.9% from the year-ago actuals.

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