hweb, jva, thanks for the comments. I like that they are committed to margin improvement, and management sound optimistic about a turnaround. Hedging hurt them as the price of coffee dropped for a long time...they ended up buying at higher prices then market.
And if they are hedged, that should help a bit as coffee prices rise. So will the one time inventory benefit, selling older cheaper inventoried coffee into a higher priced market.
But except for those kinda one time or exceptional things, I still dont understand why rising prices of coffee helps JVA. Ok, it helps revenues, but if costs go up an equal amount as sales, then its a wash.
Coffee prices rise from $1.00 to $1.50. JVA attempts to pass on these costs to their customers. Some of these customers may have short term contracts at a certain price so it could take some time, or if JVA attempts to raise the price, some customers may look for cheaper alternatives.
In any case, lets say that the customer accepts the price increase for a fifty cent increase in price starting in thirty days. Revenues go up, but costs go up an equal amount. and earnings remain the same.
Anyway, thats how I see it.
