Shares of Coffee Holding Company JVA have gained 12.4% since reporting results for the third quarter of fiscal 2026 compared with the S&P 500 index’s 0.9% return. Over the past month, JVA shares have risen 9.6%, while the S&P 500 has declined 1%.
Sales & Earnings Performance
For the three months ended July 31, 2026, Coffee Holding reported net sales of $21.7 million, down 9.3% from $23.9 million in the year-ago period. Despite the revenue decline, earnings improved to 35 cents per share from a loss of 21 cents a year earlier. Net income was $2 million against a net loss of $1.2 million. Gross profit more than doubled to $5.4 million from $2.3 million, while the gross margin expanded to 25% from 9.4%. Operating income was $2.3 million against an operating loss of $1.1 million.
Margin Expansion & Product Trends
Cost of sales fell to $16.3 million, or 75% of net sales, from $21.7 million, or 90.6% of sales, in the prior-year quarter. Total operating expenses declined 7.5% year over year to $3.1 million, while selling and administrative expenses decreased 8.4% to $2.9 million. Interest expenses fell to $37,816 from $92,683, reflecting lower borrowings.
By product line, green coffee sales declined 19.5% year over year to $8.4 million from $10.5 million. Packed coffee sales were relatively steady at $13.3 million versus $13.4 million. The company operates as a single reporting segment encompassing wholesale green coffee, private-label coffee and branded coffee.
Liquidity & Cash Flow Improve
Coffee Holding ended July with $2.9 million in cash and cash equivalents, up from $701,872 as of Oct. 31, 2025. Its line-of-credit balance declined to $2.2 million from $6.1 million, while working capital rose to $25.5 million from $22.6 million. Stockholders’ equity increased to $31 million from $27.6 million.
For the first nine months of fiscal 2026, operating activities generated $7.8 million in cash compared with a $5.4-million cash use in the prior-year period. Management attributed the improvement mainly to lower accounts receivable and inventories, partly offset by a reduction in accounts payable and accrued expenses. Investing activities used $1.2 million and financing activities used $4.4 million because of line-of-credit repayments and dividend payments.
Management Commentary
CEO Andrew Gordon described the quarter as exceptionally volatile for the coffee market, with sharp swings in green coffee prices. Management said that the company benefited from purchasing physical green coffee at lower prices during the first half of calendar 2026. It also highlighted its decision not to pass most 2025 tariffs on to wholesale roasted-coffee customers, which management said helped retain the company’s roasted customer base and preserve historical margins.
Factors Behind Results
Lower green coffee prices weighed on sales because Coffee Holding reduced prices and maintained promotional activity for roasted-coffee customers while charging lower prices to wholesale green-coffee customers. Profitability moved in the opposite direction. A favorable inventory position, tariff refunds and net trading gains lowered the cost of sales and lifted the gross margin. Trading activity generated a net gain of $620,683 in the quarter against a $769,845 loss a year earlier.
Management Outlook
Management expects additional tariff refunds to enhance earnings over the next two quarters. It also cited recently secured new business and continued volatility in green coffee prices as factors supporting its expectation for revenues, gross margin and profitability growth through the end of calendar 2026 and into 2027.
Other Developments
Coffee Holding renewed the lease for its operating facility through March 31, 2029, resulting in an additional right-of-use asset and corresponding operating lease liability of about $119,358. After the quarter-end, the company fully repaid its line-of-credit borrowings, leaving no outstanding balance as of Aug. 31, 2026.
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Coffee Holding Co., Inc. (JVA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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