NEW YORK ( TheStreet) -- Coffee Holding Company (Nasdaq: JVA) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, poor profit margins and weak operating cash flow. Highlights from the ratings report include:
- JVA's very impressive revenue growth greatly exceeded the industry average of 16.3%. Since the same quarter one year prior, revenues leaped by 87.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Despite currently having a low debt-to-equity ratio of 0.44, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.88 is weak.
- The gross profit margin for COFFEE HOLDING CO INC is currently extremely low, coming in at 6.10%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.50% significantly trails the industry average.
- Net operating cash flow has significantly decreased to -$3.03 million or 2030.98% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.