|Written by GSCR Staff|
|Tuesday, 10 July 2012 09:31|
Turnaround plays are nice. What is nicer is when a turnaround play turns into a growth story. Jamba Juice (NASDAQ – JMBA - $2.55) is one such situation.
While the JMBA products are great the stock hasn’t historically been a world-beater. However, that has changed dramatically in recent months. For starters, the Company isn’t just a fruit smoothie beverage company anymore. With nearly 800 store locations, Jamba Juice is a leading restaurant retailer in the healthy lifestyle category. The stores offer a variety of food and beverage offerings, including great tasting fruit smoothies, fresh squeezed juices, and special iced and hot teas, oatmeal made with organic steel cut oats, wraps, salads, sandwiches, California Flatbreads, and a variety of baked goods and snacks.
The menu alone isn’t the reason why the Company has gone from a turnaround story to a growth story, although that has aided its efforts in increasing revenue in its stores throughout the day. JMBA has undertaken a huge marketing shift which has resulted in a high brand awareness and customer affinity, aided by a number of royalty and product license relationships which make products available in over 50,000 retail points of distribution. Management believes that by 2015, fully $1 billion in revenue can be generated via sales of its products via stores and through its licensee-partners.
The proof is in the numbers. For 1Q12 comparable store sales jumped to 12.7% versus 2.2% and JMBA’s adjusted operating margin more than doubled. Labor costs and cost of sales have also decreased while quality is at an all-time high. While the Company enjoys huge store revenue growth and royalty revenue, its new JambaGO kiosk for college campuses and entertainment centers is catching on in the U.S. It is estimated as many as 500 will be deployed by year-end, up from 100 today.
The Street is not anticipating huge top-line growth for 2012 but the current consensus forecast calls for $234M in revenue and $0.04 this year, up from $226M and a loss of $0.16 in 2011. Next year’s projections include revenue of $251M and EPS of $0.10. We would not be surprised to see forecasts raised for both years as JMBA clearly has the wind at its back. While much of the stock’s gains have already occurred, a great deal of the risk is gone. As a result, we believe that at a current multiple of 25x FY13 EPS and less than 1x FY13 revenue, 25% or more in gains is in the cards, even without an upward revision in estimates.
This Market Monitor blog was prepared for informational purposes only. Goldman Small Cap Research, (a division of Two Triangle Consulting Group, LLC) produces research via two formats: Goldman Select Research, which typically highlights small cap companies, and Goldman Opportunity Research, which features micro cap companies in a sponsored research format. Thus, the Select product reflects the Firm’s internally generated stock ideas while the Opportunity product reflects sponsored research reports.
It is important to note that while we may track performance separately, we utilize the same coverage criteria in determining coverage of all stocks in both research formats. Please view the company’s individual disclosures for each engagement, which can be found in each company-specific report. All information contained in this blog, newsletter and in our reports were provided by the Companies or generated from our own due diligence. Our analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests, retain editorial control, and ensure independence. Analysts are compensated on a per report basis and not on the basis of his/her recommendations.
The information used and statements of fact made have been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy. Goldman Small Cap Research did not make an independent investigation or inquiry as to the accuracy of any information provided by the Company, or other firms. Goldman Small Cap Research relied solely upon information provided by the Company through its filings, press releases, presentations, and through its own internal due diligence for accuracy and completeness. Such information and the opinions expressed are subject to change without notice. A Goldman Small Cap Research blog, report, note, or newsletter is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed.
This blog does not take into account the investment objectives, financial situation, or particular needs of any particular person. This blog does not provide all information material to an investor’s decision about whether or not to make any investment. Any discussion of risks in this presentation is not a disclosure of all risks or a complete discussion of the risks mentioned. Neither Goldman Small Cap Research, nor its parent, is registered as a securities broker-dealer or an investment adviser with FINRA or with any state securities regulatory authority.
ALL INFORMATION IN THIS BLOG, REPORT OR NEWSLETTER IS PROVIDED “AS IS” WITHOUT WARRANTIES, EXPRESSED OR IMPLIED, OR REPRESENTATIONS OF ANY KIND. TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE FOR THE QUALITY, ACCURACY, COMPLETENESS, RELIABILITY OR TIMELINESS OF THIS INFORMATION, OR FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES THAT MAY ARISE OUT OF THE USE OF THIS INFORMATION BY YOU OR ANYONE ELSE (INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOSS OF OPPORTUNITIES, TRADING LOSSES, AND DAMAGES THAT MAY RESULT FROM ANY INACCURACY OR INCOMPLETENESS OF THIS INFORMATION). TO THE FULLEST EXTENT PERMITTED BY LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE TO YOU OR ANYONE ELSE UNDER ANY TORT, CONTRACT, NEGLIGENCE, STRICT LIABILITY, PRODUCTS LIABILITY, OR OTHER THEORY WITH RESPECT TO THIS PRESENTATION OF INFORMATION.
For more information, visit our Disclaimer: www.goldmanresearch.com