This summer drink specialty has come up against a lot of competition this summer. Starbucks releases its own fruit smoothies Vivanno, Jack in the Box follows suit with its own smoothie offers and just yesterday, I saw Peet’s Coffee with new health smoothies on its menu. It just shows to prove that Jamba smoothies are a popular drink during the summer and the rise of competition only seems to justify Jamba’s main product line.
First Quarter ‘08 news didn’t help Jamba’s stocks in the past three months. Share price dropped from $2.50 in May ‘08 when the earnings report was released to a current $0.99 per share today. That’s a whopping 60% drop. The drive down in price was not due to its positive revenue sales of $101.55 million which represented a 13.7% increase vs. 1stQ ’07’s $89.4 million, but rather due to its high liabilities which drove reports to a net loss of $6.4 million. Not exactly great news. Jamba reacted with plans to close ten of its stores, eliminating 53 team members and making other costs cuts along the way.
Since then Jamba has been promoting its products with new outdoor and TV ads targeted for a morning breakfast audience. Early reports suggest the campaign is working and prospects are looking very positive for its anticipated 2ndQ ‘08 earnings report to be released on August 21, 2008.
Preliminary data on Jamba’s 2ndQ earnings suggest a 10% gain in sales with $98.6 million vs. 89.6 million in 2ndQ ‘07. But we need to be careful here. Jamba still has some large liabilities to overcome which is typical for some rapidly growing and expanding companies. Jamba could still come out with a net loss and its price now entering the penny stocks could slide a bit more. But despite this gloom and doom I can’t help but look at the positive long term prospects for this company.
First Jamba has been increasing its year-to-year sales revenue since it went public. Jamba continues to expand its corporate stores now with 726 stores nationwide. Jamba has been effectively reducing its current liabilities quarter-to-quarter. Plus Jamba’s products will soon be hitting grocery shelves with its Nestle distribution deal soon to fruition in 2008 — a move aimed to popularize its brand name nationwide. All of this for company with no short term debt and a minimal long-term debt makes its $1.00 share price seem ripe for the picking.
But I am cautious investor and Jamba still has a lot of challenges to overcome — such as how to compete with new smoothie competitors and possibly the need to expand its product line. Nevertheless I think Jamba’s on the right track and I would hold my shares on Jamba for the long run. Some aggressive investors might consider doubling down on this stock before the Aug 21 earnings report release. Either way, I believe Jamba would make a good investment and would dare to predict gains revenues and in share price for this company within the next 12 months.
And that’s the Upside on Jamba Juice (JMBA)
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