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) -- Coffee Holding Company (Nasdaq: JVA) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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- JVA's debt-to-equity ratio is very low at 0.04 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, JVA has a quick ratio of 2.25, which demonstrates the ability of the company to cover short-term liquidity needs.
- COFFEE HOLDING CO INC's earnings per share declined by 41.7% in the most recent quarter compared to the same quarter a year ago. 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, COFFEE HOLDING CO INC increased its bottom line by earning $0.37 versus $0.15 in the prior year. This year, the market expects an improvement in earnings ($0.75 versus $0.37).
- The revenue fell significantly faster than the industry average of 35.5%. Since the same quarter one year prior, revenues fell by 44.7%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Food Products industry and the overall market, COFFEE HOLDING CO INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The gross profit margin for COFFEE HOLDING CO INC is currently extremely low, coming in at 12.10%. 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 2.99% trails the industry average.
-- Written by a member of TheStreet Ratings Staff