Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model. NEW YORK ( TheStreet) -- Jamba (Nasdaq: JMBA) has been downgraded by TheStreet Ratings from hold to sell. Among the areas we feel are negative, one of the most important has been poor profit margins.
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- The gross profit margin for JAMBA INC is currently lower than what is desirable, coming in at 28.20%. Regardless of JMBA's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, JMBA's net profit margin of 7.00% is significantly lower than the same period one year prior.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, JAMBA INC's return on equity significantly trails that of both the industry average and the S&P 500.
- JMBA 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. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.71 is somewhat weak and could be cause for future problems.
- JAMBA INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, JAMBA INC continued to lose money by earning -$0.16 versus -$0.34 in the prior year. This year, the market expects an improvement in earnings ($0.02 versus -$0.16).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 17.4% when compared to the same quarter one year prior, going from $3.93 million to $4.62 million.
-- Written by a member of TheStreet Ratings Staff