Jamba Inc Stock Upgraded (JMBA)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

NEW YORK ( TheStreet) -- Jamba (Nasdaq: JMBA) 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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Highlights from the ratings report include:
  • 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 turned its bottom line around by earning $0.08 versus -$0.15 in the prior year. This year, the market expects an improvement in earnings ($0.37 versus $0.08).
  • 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 0.76 is somewhat weak and could be cause for future problems.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 5.7%. Since the same quarter one year prior, revenues slightly dropped by 5.1%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to the other companies in the Hotels, Restaurants & Leisure industry and the overall market, JAMBA 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 JAMBA INC is currently lower than what is desirable, coming in at 31.18%. 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, the net profit margin of 9.84% trails the industry average.

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