STATEN ISLAND, NY - Coffee Holding Co., Inc. (NASDAQ: JVA), a leading integrated wholesale coffee roaster and dealer in the U.S., has terminated its merger agreement with Delta Corp. Holdings Limited, the company announced Monday.
The decision to end the nearly two-year-long merger process came after a failed shareholder vote in April, which led the board of directors to conclude that pursuing independent operations would better serve the company's goal of enhancing shareholder value.
CEO Andrew Gordon highlighted the company's efforts to improve its financial standing by paying down debt, a move necessitated by losses from its former subsidiary Generations Coffee LLC and expenses related to equipment purchases for manufacturing reorganization.
Despite these challenges, Coffee Holding has reported revenue growth for four consecutive quarters and profits in three of the last four reporting periods, with only a $0.02 per share loss in the most recent quarter.
The company's recent performance was affected by a spike in the London Robusta coffee market prices, impacting profit margins on branded and private label products. In response, Coffee Holding has implemented price increases for its major customers, which are expected to positively impact future financial results, particularly in the fiscal fourth quarter of 2024.
Coffee Holding has also secured new business over the past year, including production agreements with a leading retailer in the Northeast and a national retail chain in the U.S. These contracts have been instrumental in offsetting the revenue loss from the closure of the Generations/Steep subsidiary, amounting to approximately $8.0 million annually.
The company remains optimistic about its position once the London Robusta market returns to historical price levels, citing the potential for additional profits due to the acquisition of new branded and private label customers over the past 12 to 18 months.
Founded in 1971, Coffee Holding's diverse product offerings cater to a wide spectrum of consumer tastes and preferences. The company also imports green coffee beans for resale to smaller regional roasters and coffee shops in the U.S. and Canada.
This announcement is based on a press release statement, and forward-looking statements within it are subject to various risks and uncertainties that could cause actual results to differ materially from projections. Coffee Holding Co., Inc. does not undertake any obligation to update forward-looking statements post-release.
InvestingPro Insights
Amidst the backdrop of Coffee Holding Co., Inc.'s (NASDAQ: JVA) decision to terminate its merger with Delta Corp. Holdings Limited and its ongoing efforts to enhance shareholder value, InvestingPro data and insights offer a deeper look into the company's financial health and market performance.
According to InvestingPro data, Coffee Holding Co. currently has a market capitalization of $10.1 million. In terms of profitability, the company's Price/Earnings (P/E) ratio stands at 25.22, indicating the amount investors are willing to pay per dollar of earnings, which is reasonable in the context of the company's recent revenue growth.
The P/E ratio adjusted for the last twelve months as of Q2 2024, however, is significantly higher at 227.25, suggesting that investors may have high expectations for future earnings growth.
From a valuation perspective, Coffee Holding Co. is trading at a low Price/Book multiple of 0.42, which could indicate that the stock is undervalued relative to the company's book value. This is reinforced by an InvestingPro Tip highlighting that the stock is trading at a low revenue valuation multiple, which may attract investors looking for potential bargains.
On the performance front, Coffee Holding Co. has experienced a significant return over the last week, with a 24.65% price total return, and a robust return of 94.51% year-to-date as of the given date in 2024. This momentum is a positive sign for investors and may reflect the market's reaction to the company's strategic decisions and operational improvements.
For those seeking to delve deeper into Coffee Holding Co.'s financial metrics and market performance, InvestingPro offers additional tips, with a total of 12 more insights available. These can provide a comprehensive understanding of the company's position and future outlook. For access to these valuable tips, visit: https://www.investing.com/pro/JVA and remember to use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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