$LWAY beat $ONON miss but maintain

A Quick Look at Lifeway Foods and On Holding Earnings

Lifeway Foods reports record earnings and ends the day up 48%, while On reports mediocre earnings but still ends the day up almost 5%.

On reported EPS of 16 cents per share that fell short of street estimates of 19 cents per share but revenue grew 29% to $653 million, beating estimates of $646 million.

I think the bar was a little high after last earnings season and I knew that if they didn’t smash both the top and bottom line then the stock would fall, regardless of if they reported a good quarter. The stock pulled back a little pre-market but once the market opened it saw an increase. It is still priced a little at a 41x forward p/e but the market rewards good companies and I believe that is what is happening with On.

Some key highlights from their earnings call;

“So we are very much moving from an OpEx led production model to more a CapEx model. “ Talking about the production of the new Light spray

“you've seen the 63% growth in Q2 for apparel which is incredible. And of course, that's a result of an incredible brand heat that we already talked about. And people are now also looking to dress head-to-toe in the On brand.” I think this is a big deal because On can start to take more market share out of normal fitness apparel powerhouses like Lululemon and people aren’t too fond of the Lulu shoes but the whole On outfit can become a staple since their shoes are top-notch.

When asked about step-downs in the consumer, “ I think we confirmed an already strong guidance and we wouldn't do that if we didn't have confidence in the consumer. We see very positive signs over the last couple of weeks. So actually what we see happening within our channels, what we hear from our partners versus what some of the market reaction was is not exactly in-line and this gives us also confidence from US perspective for the rest of the year.”

I’m not worried about the missed earnings, the street got ahead of itself after a blowout q1, I still hold a price target of $45-48.

Lifeway Foods reported eps of 25 cents per share, above estimates of 20 cents, they also reported revenue of $49 million which came in above estimates of $45 million.

Not much to say here I mean the CEO literally gave us the answer to this quarter in an interview this summer.

There is another family feud going on now though as Ludmilla and Edward Smolyansky now want a whole new leadership team.