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CVGI And JMBA: What Earnings Results Indicate

|Includes: CVGI, Jamba, Inc. (JMBA)

Earnings announcements are a great tool to get an insight about any company's operations and to get an idea as to where the company might be heading. Commercial Vehicle Group Inc. (NASDAQ: CVGI) and Jamba Inc. (NASDAQ: JMBA) have recently reported their quarterly earnings, which makes it a good time to do an objective analysis. Here is a closer look.

Commercial Vehicle Group Inc. is a major supplier of cab related products to the global commercial vehicle market, including: the heavy-duty truck market, construction, military, bus, agriculture markets and the specialty transportation market. As with the improving sentiment in the wider industry, the stock has been a major beneficiary as it gained more than 50 percent between January and June this year. This was before the 15 percent correction in July, which has brought down the stock to reasonable valuations.

The rally in the stock was primarily fueled by improving financial performance, and this aspect once again came to the forefront when the company reported its second quarter results. Continued buoyancy in the heavy-duty truck and construction markets lifted the company's top line by 8.6 percent to $216 million, while net income stood at $2.7 million, compared to a loss of $1.7 million. The results underline the effect of cost cutting measures undertaken by the management, and these tailwinds are expected to continue in the coming quarters. Key takeaway here is that the stock had already run up substantially and these efficiency gains were already factored into prices, which explains why the stock didn't gain following the results. While the correction is healthy, the company's leveraged balance sheet and the stock price 4.3 times of the book value appear little too high.

On the other side of the spectrum is Jamba, which owns and franchises Jamba Juice stores. The company is at a mature stage where revenue growth is tepid at best, but the management's efforts to boost profitability are paying off. Over the last four years, the company has recovered from an annual loss of $16.7 million to a profit of $2.1 million. The stock has jumped 28 percent over the last month, and a big jump in these gains came after the company posted better than expected second quarter results.

Although quarterly top line of $ 64.2 million was slightly lower than the $67.8 million posted in the second quarter of 2013, earnings per share of 44 cents per share were not only ahead of the 36 cents it earned in the same quarter of 2013, but also more than the 37 cents analysts were expecting the company to pay. The company's profitability was boosted by the success of kale and chia seed juice offerings which the company is planning to take nationwide next year. The positive reception to the new product lineup can be expected to fuel the company's margins as well as expansion in new markets.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.