Take a closer look at the basics of LANC
Lancaster Colony Corp. (NASDAQ: LANC) is a manufacturer and marketer of specialty foods for the retail and food service markets. Lancaster Colony is the parent company of the T. Marzetti Company. Other Lancaster Colony Corporation brands are New York Brand Bakery, Sister Schubert’s and Flatout.
Lancaster Colony stock is up roughly 29.5% year over year, rebounding sharply from its two-year low in March 2020 of $ 114.55. The stock appears to have plateaued near the $ 190 level in May after hitting a two-year high of $ 193.66 earlier this month. Lancaster Colony also offers a forward dividend of $ 3.00, which translates into a dividend yield of 1.60%.
In terms of performance within the confessional denomination, Lancaster Colony has exceeded earnings expectations in three of the last four published reports. As a brief overview, LANC exceeded expectations for the second quarter of 2020 with a margin of $ 0.29 and earnings per share (EPS) of $ 1.25. Then LANC fell short of expectations for the third quarter of 2020 with a margin of $ 0.15 and increased earnings per share of $ 1.45. Lancaster Colony’s earnings rose to $ 1.85 per share in the fourth quarter of 2020, beating expectations with a margin of $ 0.41. Most recently, LANC exceeded expectations in the first quarter of 2021 with a margin of $ 0.11 and reported earnings per share of $ 1.35.
Generally speaking, Lancaster Colony does very well. LANC has an excellent balance sheet of $ 211.12 million in cash and only $ 17.21 million in total debt. In addition, Lancaster Colony Corporation has steadily increased its sales over the past few years, increasing its sales by 16% since 2017.
LANC has also performed consistently on the bottom line, with the exception of a 10% drop in net income in 2020, which is likely a direct result of the COVID-19 pandemic. Lancaster Colony’s net income is still up 22.6% since 2017. The only and biggest fundamental problem with LANC is the current stock valuation. Lancaster Colony stock is currently trading at a price-to-earnings-ratio of 36.65, which is simply too high to warrant this given the company’s modest growth rates. Overall, investors are probably better off waiting on the sidelines for a better entry point into Lancaster Colony stock.