Here are some comments on JMBA by analyst Ali Meshkati (zenpenny1 on Twitter)
- JMBA declined nearly 7% during the month of April. JMBA is one of my favorite opportunities in the portfolios currently. However, I am waiting for the share price to begin showing some signs of life before adding. What I see in JMBA is not just a potential growth story due to an increasingly health conscious consumer. JMBA is not going to be a smashing revenue model that creates monstrous cash flow for the company causing the share price to explode due to undervaluation according to every metric available. JMBA is 100% a branding story.
In JMBA you have the most well known fresh juice company domestically, with a focused effort on creating the same type of brand consciousness overseas. You also have a management that doesn’t seem as concerned with profiting from each individual franchised store as much as they do making JMBA stores as prevalent as Starbucks in neighborhoods across America. Furthermore, there is an effort to install small JMBA kiosks in universities, hospitals, school cafeterias etc. to further expand the brand recognition. Not to mention the effort that is being made to have JMBA products in grocery stores.
You can see the trend here. JMBA is a branding recognition story in an industry that is just beginning to bubble beneath the surface. Everything management seems to be doing is geared towards putting JMBA in front of the eyeballs of the consumer. Revenue growth will follow the eyeballs. Perhaps of even greater potential is the brand recognition that these efforts will create, making JMBA an eventual high value takeover target.
All of these factors together when combined with the successful restructuring efforts, debt reduction and recent return back to profitability make the $220 million market cap being assigned the company an extremely low risk proposition with substantial upside potential.
During the q and a an analyst asked whether the company's yearly comp guidance of 4 to 6 percent was for company or franchise stores, she said that this guidance covered both. So yearly guidance is set to be around 5 percent positive if all goes well and q1 guidance is set to be "slightly" positive.
She did mention that warm weather in q1 2012 contributed 5 to 6 points to their positive quarter, if I remember correctly.
Are you referring to the TAG conference which was recently held in NYC? I listened carefully to her presentation and I believe she said that the comps were slightly positive for the first quarter, which is impressive because they were facing a positive 12.7 percent comparison from q1 2012. But I don't think she said they were trending up 5 points.
what's so funny? you're a member of a jamba club also ohno, in fact, you participate more than anyone.
Here is part of some research posted on Twitter by zenpenny1. You can find/follow him on both Stocktwits and Twitter.
Downside Risk and Future Potential
JMBA is a very simple story when you boil it down to its essence. You have the preeminent brand name in a burgeoning industry that is doing everything right in order to grow that brand into something that will be recognized globally. What is that kind of recognition worth in terms of market cap? These types of guesstimates based on any number of metrics are typically unreliable in nature. What I am here to tell you is what that kind of recognition is NOT worth. It is certainly NOT worth $238 million in market cap and a $3 share price. Meaning that risk in JMBA shares are minimal here.
As management continues to boost initiatives in a consumer market that continually demands improved products for health and well being, the risk cushion that JMBA has at these levels becomes more and more substantial. As brand awareness grows so does the upside potential for JMBA shares that are certainly trading at a discount to peers.
On a price to sales basis, you have the following:
- DNKN (Dunkin Donuts) = 6
- SBUX (Starbucks) = 3
- MCD (McDonalds) = 3.6
- JMBA (Jamba Juice) = 1
The company has a stated goal of becoming a $1 billion globally recognized brand by 2015. A goal that I believe to be easily obtainable given the current mix of management efforts and initiatives.
Upside potential in Jamba shares is very easily into the teens as continued growth efforts begin grabbing the attention of investors. A market capitalization over $1 billion for a market leader, in a competitive industry, that is prone to consolidation is not a stretch by any means. Especially when that market leader is growing across multiple consumer segments.
On the Q2 2012 conference call James White, while responding to a question from Conrad Lyon, said this:
We'll do a more comprehensive update on the Q3 call embedded in our outlook for the year. And we'll spend a little bit more time walking through how to think about JambaGo on a go-forward basis.
We didn't hear much more about the economics of the Jambago initiative on the Q3 call. More details on this program would be greatly appreciated.