What Is Lifeway Foods, Inc.'s (NASDAQ:LWAY) Share Price Doing?

Lifeway Foods, Inc. (NASDAQ:LWAY), is not the largest company out there, but it received a lot of attention from a substantial price increase on the NASDAQGM over the last few months. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Today we will analyse the most recent data on Lifeway Foods’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Lifeway Foods

What Is Lifeway Foods Worth?

The share price seems sensible at the moment according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 15.24x is currently trading slightly above its industry peers’ ratio of 15.18x, which means if you buy Lifeway Foods today, you’d be paying a relatively reasonable price for it. And if you believe Lifeway Foods should be trading in this range, then there isn’t really any room for the share price grow beyond the levels of other industry peers over the long-term. Is there another opportunity to buy low in the future? Since Lifeway Foods’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of Lifeway Foods look like?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of Lifeway Foods, it is expected to deliver a relatively unexciting earnings growth of 3.8%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for Lifeway Foods, at least in the near term.

What This Means For You

Are you a shareholder? LWAY’s future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at LWAY? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on LWAY, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive growth outlook may mean it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Lifeway Foods as a business, it's important to be aware of any risks it's facing. For instance, we've identified 2 warning signs for Lifeway Foods (1 doesn't sit too well with us) you should be familiar with.

If you are no longer interested in Lifeway Foods, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.