NEW YORK (TheStreet) -- Shares of Coffee Holding Co. (JVA - Get Report) are lower, down -7.70% to $7.19, on Tuesday.
The company reported a second quarter profit of $1.26 million, or 19 cents per share, compared to a loss of $395,000, or 6 cents per share, a year ago.
However, net sales declined to $25.4 million for the three months ended April 30 from $36.7 million in the same period a year ago.
Coffee Holding cited a decrease of 20% in pounds of green coffee sold during the quarter as a result of market volatility and a significant increase in coffee prices.
TheStreet Ratings team rates COFFEE HOLDING CO INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate COFFEE HOLDING CO INC (JVA) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its increase in net income, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Food Products industry average. The net income increased by 46.3% when compared to the same quarter one year prior, rising from $0.94 million to $1.37 million.
- JVA has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.78, which clearly demonstrates the ability to cover short-term cash needs.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
- The gross profit margin for COFFEE HOLDING CO INC is rather low; currently it is at 15.60%. Regardless of JVA's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.01% trails the industry average.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Food Products industry and the overall market, COFFEE HOLDING CO INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: JVA Ratings Report
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