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 downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and relatively poor performance when compared with the S&P 500 during the past year.
- EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.
- 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. To add to this, JVA has a quick ratio of 2.27, which demonstrates the ability of the company to cover short-term liquidity needs.
- COFFEE HOLDING CO 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, 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 ($0.66 versus $0.37).
- Net operating cash flow has significantly increased by 160.96% to $0.70 million when compared to the same quarter last year. Despite an increase in cash flow of 160.96%, COFFEE HOLDING CO INC is still growing at a significantly lower rate than the industry average of 570.31%.
- The gross profit margin for COFFEE HOLDING CO INC is currently extremely low, coming in at 4.10%. 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, JVA's net profit margin of -1.07% significantly underperformed when compared to the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Food Products industry average. The net income has decreased by 6.7% when compared to the same quarter one year ago, dropping from -$0.37 million to -$0.40 million.
-- Written by a member of TheStreet Ratings Staff