Saturday, December 21, 2013

Why Lifeway Foods Is Poised to Pull Back

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, dairy products specialist Lifeway Foods (NASDAQ: LWAY  ) has received a distressing two-star ranking.

With that in mind, let's take a closer look at Lifeway, and see what CAPS investors are saying about the stock right now.

Lifeway facts

 

 

Headquarters (founded)

Morton Grove, Ill. (1986)

Market Cap

$285.4 million

Industry

Packaged foods

Trailing-12-Month Revenue

$86.3 million

Management

CEO Julie Smolyansky (since 2002)

CFO Edward Smolyansky (since 2004)

Return on Equity (average, past 3 years)

11.5%

Cash/Debt

$5.1 million / $5.4 million

Dividend Yield

0.5%

Competitors

Dean Foods 

General Mills 

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 16% of the 61 All-Star members who have rated Lifeway believe the stock will underperform the S&P 500 going forward.

Just yesterday, one of those bears, fellow Fool Rich Smith (TMFDitty), touched on the stock's seemingly unsustainable valuation:

I'll take advantage of an unwarranted price spike to short this one [on Thursday]. LWAY is a great company, but it's just reneged on a commitment to not spend money on expanding capacity, buying a plant to quadruple capacity instead. And [free cash flow] is down in comparison with last year's Q1. Time to exit.

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