Lakeland Industries, Inc.

LAKE Details

Lakeland Industries, Inc. (NASDAQ: LAKE) designs and sells a line of safety clothing and accessories for the industrial and public protective clothing markets. Its product categories comprise limited use/disposable protective clothing, high-end chemical protection suits, firefighting and heat protective equipment, durable woven garments, high visibility clothing, and glove and sleeves.

Latest News:

• Key Promotions: On December 16, 2021, LAKE promoted Allen E. Dillard's as Chief Operating and Financial Officer, effective January 1, 2022. Mr. Dillard has been the Chief Financial Officer of Lakeland Industries since August 12, 2019. In this new role, Mr. Dillard's will expand his reporting responsibilities to include production, planning, and procurement.
  

Financial Highlights: Q3FY22 (ended on October 31, 2021)

(Source: Company’s Website)

• Net Sales: The Company’s net sales were USD 30.03 million in Q3FY22 compared to USD 41.45 million in Q3FY21, respectively.
• Strong Cash Position: The company had posted cash of USD 55.53 million as of October 31, 2021, from USD 52.60 million as of January 31, 2021.
• Undervalued Multiples: EV/Sales, EV/EBITDA, and Price to Earnings multiples for the current quarter are undervalued against the median of the textile and apparel sector.

 Key Risks:

• Technology Risk: The fast advancement of fabric technology has an ongoing influence on the company's garment applications and may directly impact product performance. Furthermore, other companies may render LAKE's products obsolete or noncompetitive. If any of these things happen, it will have a significant and negative impact on our business, prospects, financial condition, and operating results.
• Competition Risk: LAKE operates in the textile, apparels and luxury goods industry. It faces direct competition from more significant players such as DuPont, Honeywell, Ansell and Kimberly Clark, with higher financial and operational resources at their disposal. Any advanced innovation or superior product development by its competitors could impact its operations.

Valuation Methodology: EV/EBITDA Multiple based Relative Valuation

(Source: Analysis by Kalkine Group)

Stock Recommendation: 

LAKE's stock price has fallen 17.57% in the past six months and is currently leaning towards the lower end of its 52-week range of USD 18.58 to USD 41.78. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 22.42.

Considering the correction in the stock price, undervalues multiples, solid balance sheet, associated risks, and current valuation, we recommend a "Speculative Buy" rating on the stock at the closing price of USD 19.14, down 0.05% as of February 16, 2022.

Year Technical Price Chart (as on February 16, 2022). Source: REFINITIV, Analysis by Kalkine Group

Technical Summary Analysis

                                          Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors' appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above.