Lakeland Reports 1Q 2018 Financial Results and Soars Over 8%, Here’s What You Need to Know

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Lakeland Industries, Inc. (NASDAQ: LAKE) shares were up over 8% today, following the company’s fiscal 2018 first quarter earnings release. The leading global industry, healthcare and first responders protective clothing manufacturer reported strong growth in its revenues and free cash flow, and therefore, it was one of the primary catalysts that sent shares higher. Let’s analyze Lakeland’s 1Q 2018 financial results.

Lakeland 1Q 2018 Financial Highlights

Lakeland Industries reported net sales of $23M for the first quarter of the 2018 fiscal year, which was over a 10% increase from its net sales of $20.4M in the same period in the previous fiscal year. LAKE reported gross profit of $8.6M, an increase of 26% year over year. Moreover, the company was able to grow its operating income by over 1,000% year over year, to $2.5M from $169K in the same period in the prior fiscal year.

Due to its significant growth in net sales and operating income, Lakeland reported net income of $1.7M for 1Q 2018, compared to just $3K in 1Q 2017. Additionally, Lakeland reported basic earnings per share of 24 cents and diluted earnings per share of 23 cents for 1Q 2018, which was up from $0.00 and $0.00, respectively, in 1Q 2017. The company also reported free cash flow of $2.2M in 1Q 2018, which was a significant increase from $740K in 1Q 2017.

According to Lakeland Industries President and Chief Executive Officer Christopher J. Ryan, “In the first quarter of fiscal 2018 we delivered strong growth in revenues, profits and free cash flow.  The improvements in financial results and many operating performance measures reflect our management team’s successful implementation of key strategic initiatives that build upon the progress made in the fourth quarter of fiscal 2017.”

What You Need to Know About LAKEd

  • LAKE shares ended the day up over 8%, after the company announced its first quarter 2018 financial results.
  • As of June 14, 2017, Lakeland shares have been up over 15% over the past three months and over 35% over the past year.
  • LAKE had a trailing 12-month price-to-earnings ratio (P/E) of 22.4, while the industry average was 35.3. Lakeland had a price-to-book ratio (P/B) of 1.2, while the industry average was 4.9. Moreover, it had a trailing 12-month price-to-sales ratio of 1.0, while the industry average was 4.2.
  • LAKE has a low float of 6.69M and shares outstanding of 7.26M.
  • The stock rose above its upper Bollinger Band, after its earnings results.

Check out LAKE on the daily chart.

Lakeland

Source: TradingView

Bull Case

Lakeland reported its first quarter 2018 financial results, and some traders may be thinking this was a bullish catalyst due to its year over year growth. Moreover, from a value standpoint, based on its valuation ratios, LAKE may be considered undervalued, and some traders may want to get long the stock. Moreover, the stock has a low float and some traders might be thinking that this stock could build momentum from its earnings growth.

Bear Case

LAKE has been up significantly over the past year, including today, and some traders may be viewing the stock as a mean reversion trade. Moreover, the stock closed above its upper Bollinger Band, an indication that the stock could potentially pull back.

The Bottom Line

Lakeland reported its 1Q 2018 financial results, and the company showed some growth in its revenues and earnings year over year. However, there are still some reasons traders may be bullish and bearish on the stock. Some may be looking at LAKE as a momentum play, while other may see it as a mean reversion, or contrarian, trade.

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