Landec Corp. – Value Analysis (NASDAQ:LNDC) : August 8, 2017

Capitalcube gives Landec Corp. a score of 39.

Our analysis is based on comparing Landec Corp. with the following peers – E. I. du Pont de Nemours and Company, PolyOne Corporation, Westlake Chemical Corporation, Huntsman Corporation, Pinnacle Foods, Inc., J. M. Smucker Company, Kraft Heinz Company, General Mills, Inc., Air Products and Chemicals, Inc. and Campbell Soup Company (DD-US, POL-US, WLK-US, HUN-US, PF-US, SJM-US, KHC-US, GIS-US, APD-US and CPB-US).

Investment Outlook

Landec Corp. has a fundamental score of 39 and has a relative valuation of NEUTRAL.

Fundamental Score

Access our research and ratings on Landec Corp.

Company Overview

  • Compared to peers, relative underperformance last month is down from a median performance last year.
  • It trades at a lower Price/Book multiple (1.51) than its peer median (3.38).
  • The market expects LNDC-US‘s earnings to grow at about the same rate as its chosen peers and also does not seem to expect much improvement in its below peer median returns.
  • LNDC-US has relatively low net profit margins while its asset efficiency is relatively high.
  • Compared with its chosen peers, changes in the company’s annual earnings are better than the changes in its revenue, implying better than median cost control and/or some economies of scale.
  • LNDC-US‘s return on assets currently and over the past five years has trailed the peer median and suggests the company might be operationally challenged relative to its peers.
  • The company’s relatively low gross and pre-tax margins suggest a non-differentiated product portfolio and not much control on operating costs relative to peers.
  • While LNDC-US‘s revenues in recent years have grown faster than the peer median, the market gives the stock a P/E ratio that is around peer median suggesting that the market has some questions about the company’s long-term strategy.
  • The company’s capital investment program and to-date returns suggest that the company is likely making big bets on the future.

Access our research and ratings on Landec Corp.

Leverage & Liquidity

  • All 10 peers for the company have an outstanding debt balance.

LNDC-US has maintained its Quick & Able profile from the prior year-end.

  • LNDC-US‘s interest coverage has increased 1.34 points from last year’s low but is still below its four-year average interest coverage of 9.98.
  • While its interest coverage increased to 8.49x from 7.15x (in 2016), its peer median decreased during this period to 5.71x from 7.39x.
  • Interest coverage rose 3.02 points relative to peers (and is now higher than its peer median).

Access the detailed analysis for Landec Corp.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
E. I. du Pont de Nemours and Company 17.43 1.93 10.58 12.88
PolyOne Corporation 31.98 2.08 5.07 21.82
Westlake Chemical Corporation 29.09 2.31 5.71 28.59
Huntsman Corporation 41.29 2.11 3.6 20.44
Pinnacle Foods, Inc. 29.19 1.72 3.41 15.03
J. M. Smucker Company 27.53 0.9 7.83 19.64
Kraft Heinz Company 23.17 0.97 5.57 14.62
General Mills, Inc. 22.03 0.76 9.11 29.38
Air Products and Chemicals, Inc. 12.32 2.2 13.57 61.33
Campbell Soup Company 16.48 0.76 2.13 38.63
Landec Corporation N/A 1.58 8.49 N/A
Peer Median 25.35 1.72 5.71 21.13
Best In Class 12.32 2.31 13.57 61.33

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Company Profile

Landec Corp. engages in designing, developing, manufacturing, and selling of products for food and biomaterials markets and license technology applications. It operates through the following segments: Packaged Fresh Vegetables, Food Export, and Biomaterials. The Packaged Fresh Vegetables segment includes marketing and packing specialty packaged whole and fresh-cut fruit and vegetables. The Food Export segment consists of sale of whole commodity fruit and vegetable product. The Biomaterials segment sells products utilizing hyaluronan, a naturally occurring polysaccharide that is distributed in the extracellular matrix of connective tissues in both animals and humans. The company was founded by Ray Stewart on October 31, 1986 and is headquartered in Menlo Park, CA.

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