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3 Questions for Jamba, Inc. (JMBA)

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Jamba Juice (JMBA)Jamba, Inc. (NASDAQ:JMBA) is in a good place these days.

Shares of the leading smoothie-chain operator are closing in on the two-year highs it hit last summer. After three consecutive winning months, investors are flocking to the company that has spearheaded the smoothie craze that is now being aped by Starbucks Corporation (NASDAQ:SBUX) and the leading burger chains.

This is the kind of momentum that can be extended or come to a screeching halt on a whiff of news, and that’s exactly what the market will be getting when Jamba, Inc. (NASDAQ:JMBA) reports its latest quarterly results after tomorrow’s market close.

Let’s go over some of the important questions that the 788-unit chain may answer.

1. Can the positive comps keep coming?
Jamba has an impressive streak going. Comps at company-owned stores climbed 3.9% in its previous quarter, stretching the number of consecutive quarters with positive same-store sales to eight periods.

It’s probably a surprise to some who figured that McDonald’s Corporation (NYSE:MCD) adding smoothies to its McCafe line in the summer of 2010 and Starbucks expanding its blender army with the 2011 acquisition of Evolution Fresh would spell the end of Jamba, Inc. (NASDAQ:JMBA)’s run.

Nope.

The arrival of smoothies at the world’s largest restaurant chain only educated the market. It’s not a surprise that Jamba’s eight-quarter streak began just as real fruit smoothies were introduced at Mickey D’s.

Starbucks had been serving smoothies well before taking on a juice bar concept in 2011, but the move validated the chilly fruit drink as a premium beverage just as the baron of baristas worked its magic decades ago on coffee.

2. Will 2013 be the year of profitability?
All four major analysts with 2013 estimates see Jamba posting its first annual profit this year since going public. They are clustered tightly, seeing net income clock in between $0.07 a share and $0.09 a share for all of 2013.

Don’t expect positive earnings tomorrow.

Jamba’s refranchising efforts — handing over company-owned units to successful franchisees — has resulted in a more favorable margins profile, but this is still a seasonal business. Folks just don’t slurp down boost-packed fruit drinks when the weather’s cool.

Jamba lives for the spring and summer, even though it continues to fortify its menu with warm drinks, hot oatmeal, and other cool-weather indulgences. However, Jamba should still be on track to discuss its profitable outlook for 2013.

3. Can it stick to its original 2013 guidance?
Jamba offered up its first stab at an outlook for 2013 four months ago.

  • Jamba’s aiming for comps at company-owned stores to rise 4% to 6% in 2013.
  • Store-level margins should be 20%, and operating income margins should be 2.5% to 3%.
  • Jamba wants to build on its 788-store empire by developing 60 to 80 locations in 2013.
  • Smaller and largely school-centric JambaGO stations are a priority, and the company’s targeting 1,000 units added this year.
  • Consumer packaged goods will be a small piece of the revenue mix at $4 million to $5 million as Jamba cashes in on its status as a healthy lifestyle brand.

A lot has happened in four months. The economy has shown improved signs of life, though the end in January of the 2% payroll tax cut is giving consumers less take-home pay.

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