For Part 1 of this series published in September 2012, please click here.
2012 Was A Successful Transition Year
From 2009-2012 Jamba Juice (JMBA) embarked on an ambitious corporate plan to transform the company from smoothie-maker, to active/healthy lifestyle brand. Not only has the company transformed its image since the Great Recession of '08, it has transformed its profitability as well.
2012 marked Jamba's first year of actual profit since going public in 2006. The company reported $0.3M in net income, up a significant amount from a loss of ($8.3M) in 2011. Besides bolstering profitability, Jamba was able to grow its topline by 1% to $228M. This number is artificially lower than it should be because of one less week in the reporting period for 2012. When adjusted for this extra week ($3.6M in revenue), Jamba actually grew 2.3% for the year.
Since publishing my exclusive interview with Jamba CEO James White in September 2012, the stock has climbed ~22% on the heels of these excellent numbers. A great Q4 report as well as positive 2013 guidance, have treated Jamba shareholders well.
Growth Continues in 2013
Jamba made significant progress on several growth initiatives during 2012, which will all continue to expand in 2013.
JambaGo: This innovative CPG distribution concept was launched in late 2011 and ended 2012 with 404 locations (up from 35 in 2011). Plans are for 1,000+ more locations in 2013.
More Store Openings: Jamba added 16 international stores in 2012, bringing its total to 35 locations. The company guided for 60-80 new locations (U.S. and internationally) in 2013, as well. Recently multi-year agreements to open new stores have been signed in California (125 stores in 3 years) and Mexico (80 stores in 10 years).
CPG Business: CPG revenue grew 91% in 2012 to $2.1M. Although this was slightly below Jamba's initial target of $3M, it was still a great step forward. Jamba will continue to roll out its CPG business to new locations in 2013 as well expanding in-store offerings via Jamba Energy and Talbot Tea's, among others. Jamba has already guided for CPG revenue to double again in 2013 (between $4-$5M).
The analyst consensus for 2013 revenue is currently $243.6M, and increase of 6.5% from 2012. This is almost triple the growth we saw from 2011-2012 (2.3%) and is a testament to the success of Jamba's new initiatives.
Jamba aggressively guided to achieve income from operations at a level of 2.5%-3% of revenue for 2013. This means net income is projected to be between $6.1M-$7.3M for the year, a dramatic jump from the $0.3M reported in 2012.
Estimates for 2014 EPS have risen by 18% since Part 1 of this series, increasing from $0.11 to $0.13. Using that number, Jamba trades at 22.6x forward earnings. Not quite cheap, but Jamba deserves a premium.
Besides targeting a growing sector (health conscious consumers), Jamba has an excellent balance sheet with $0.41 per share ($31.5M) in net cash. If we back this $0.41 off Jamba's current share price, then its forward P/E drops to just 19.5x.
Because of its large pile of cash, ideal target market and expanding growth initiatives, Jamba shares warrant a premium multiple. Earnings estimates for 2013 ($0.08) and 2014 ($0.13) still have plenty of room to expand (like they've been doing), if Jamba can continue to exceed expectations. This gives shares potential upside at $2.94 per share from a fundamental standpoint.
Jamba Juice did an amazing job turning itself around in 2012 and achieving profitability. If the company is able to move forward and reach its growth targets for 2013 and beyond, then shares should continue to appreciate.