Lifeway (LWAY)

[gfp927z]

Giff, How do you figure a forward PE of 20? With the current shareprice of $10, Lifeway would have to generate .50 cents in earnings over the next 4 quarters to have a forward PE of 20. That's over .12 per quarter. There's no way that's going to happen. Earnings over the next several quarters will likely be .04-.06 per quarter, and possibly get back to .07-08 if we're lucky in the last quarters of 2008. So, say an average of .06 cents/quarter for 2008, would give a forward PE of 42.

I think the thing that affected everyone's valuation metrics was the big jump in revenues and earnings from the Helios acquisition in 2006, but that was just a one time event. Between Q1-06 and Q1-07, revenues grew by 50%, and earnings by even more. But then between Q1-07 and Q1-08, revenue growth slowed to approx 20%, and earnings collapsed. The big question now is how long before an earnings recovery? We can't begin to gauge that until the company releases the earning numbers for Q4-07 in ... April - 4 months late.

Here are the approx revenues for the last 4 years -


Q4-04 4.2 mil
Q1-05 4.7 mil
Q2-05 4.8 mil
Q3-05 5.2 mil
Q4-05 5.2 mil
Q1-06 6.0 mil
Q2-06 6.4 mil
Q3-06 7.5 mil
Q4-06 7.9 mil
Q1-07 9.0 mil
Q2-07 9.7 mil
Q3-07 9.8 mil
Q4-07 10.2 mil
Q1-07 ~10.7 mil(?)