In This Article:
Today I will examine Jamba Inc’s (NASDAQ:JMBA) latest earnings update (03 October 2017) and compare these figures against its performance over the past couple of years, in addition to how the rest of JMBA’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. See our latest analysis for Jamba
Was JMBA’s recent earnings decline indicative of a tough track record?
I prefer to use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This blend allows me to analyze various companies on a similar basis, using new information. For Jamba, its most recent bottom-line (trailing twelve month) is -US$17.06M, which, against the previous year’s figure, has become more negative. Since these figures are relatively short-term thinking, I have created an annualized five-year figure for JMBA’s net income, which stands at -US$5.87M. This doesn’t look much better, since earnings seem to have gradually been getting more and more negative over time.
We can further examine Jamba’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Jamba has seen an annual decline in revenue of -14.37%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Inspecting growth from a sector-level, the US hospitality industry has been growing its average earnings by double-digit 16.25% over the previous year, and 11.30% over the past half a decade. This suggests that whatever uplift the industry is benefiting from, Jamba has not been able to realize the gains unlike its industry peers.
What does this mean?
Jamba’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to envisage what will happen in the future and when. The most valuable step is to examine company-specific issues Jamba may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research Jamba to get a more holistic view of the stock by looking at:
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1. Financial Health: Is JMBA’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
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2. Valuation: What is JMBA worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether JMBA is currently mispriced by the market.
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3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 03 October 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.