Jamba (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 (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 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 (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's run.
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.
The good news here is that Statrbucks reaffirmed its 2013 outlook when it reported last month. If consumers aren't flinching at costly blasts of java, then the smoothie chain should hold up just fine.
There can always be snags on store expansion, JambaGO rollouts, and the distributor relationships necessary to cultivate $5 million packaged goods sales outside of the stores. Taking back its consumer packaged goods business from Nestle was a brazen move, though the timing may be iffy to take control of its energy drink lines at a time when Monster Beverage has come under fire for the adrenaline-juicing contents of its popular canned beverages. Monster recently posted softer-than-expected sales, though the shares rallied last week as the company defended itself capably against reports detailing the risks of caffeinated beverages.
However, the more important store-based metrics should hold up just fine. If Jamba strays higher or lower on those guidance items, the shares should react accordingly.
Final thoughts for the next 24 hours
Heading into tomorrow's report, investors shouldn't panic at the sight of a loss. It also wouldn't be a shock if Jamba posts a deficit larger than the $0.11 a share that Wall Street is targeting. Jamba has come up short against analyst bottom-line projections in each of the two previous quarters.
Investors also shouldn't freak out at weak revenue growth. Analysts are eyeing just 4% in revenue growth, but that metric is being weighed down by the stores that are being passed on to franchisees. The refranchising push results in lower revenue but healthier profit margins.
Let's get those blenders ready.
Longtime Fool contributor Rick Aristotle Munarriz owns shares of Jamba. The Motley Fool recommends McDonald's, Monster Beverage, and Starbucks. The Motley Fool owns shares of McDonald's, Monster Beverage, and Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.