Jamba (JMBA)

  • Market Cap: $55 Million
  • Z-Score: -0.82 (as of October 2008)
  • Jamba (better known as Jamba Juice) manufactures and retails blended juices, beverages and snacks, with an emphasis on freshness and nutrition. Unfortunately, Jamba Juice has had a lousy track record since going public in June 2005, at $8.00 per share. As with many "fad" companies, Jamba Juice's success was short-lived.

    Jamba has posted losses in six of the last eight quarters. Sales peaked in the company's first quarter of 2008 and have steadily declined since then.

    Why?

    Jamba's first problem is its lack of a full menu. Other than a few baked goods items, Jamba primarily serves juice and juice blends. That is not enough menu diversification to attract diners and generate growth.

    In its attempt to grow, Jamba has burned cash and has saddled itself with debt and lease obligations, which is the company's second problem. We should expect Jamba's cash burn and further balance sheet deterioration to continue.

    Finally, Jamba is about to feel pain from a new source: McDonald's ( MCD). On McDonald's last conference call the company emphasized that it will expand further into the beverage business -- specifically, smoothies, frappes and bottled drinks. This is one battle that McDonald's the Goliath will probably win.

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