Analyzing Reeds (OTCMKTS:REED) and Coffee (NASDAQ:JVA)

Coffee (NASDAQ:JVA) and Reeds (OTCMKTS:REED) are both small-cap consumer staples companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, risk, profitability, earnings, analyst recommendations, institutional ownership and valuation.

Profitability

This table compares Coffee and Reeds’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Coffee	2.06%	6.84%	4.67%
Reeds	-42.48%	-358.36%	-59.26%

Valuation and Earnings

This table compares Coffee and Reeds”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Coffee	$78.56 million	0.26	$2.22 million	$0.32	11.03
Reeds	$36.32 million	0.88	-$13.15 million	($7.32)	-0.49

Coffee has higher revenue and earnings than Reeds. Reeds is trading at a lower price-to-earnings ratio than Coffee, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current ratings and price targets for Coffee and Reeds, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Coffee	1	0	0	0	1.00
Reeds	0	0	1	0	3.00

Reeds has a consensus target price of $10.50, suggesting a potential upside of 194.94%. Given Reeds’ stronger consensus rating and higher possible upside, analysts clearly believe Reeds is more favorable than Coffee.

Insider & Institutional Ownership

51.5% of Reeds shares are held by institutional investors. 22.1% of Coffee shares are held by company insiders. Comparatively, 0.3% of Reeds shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Risk and Volatility

Coffee has a beta of 1.57, suggesting that its share price is 57% more volatile than the S&P 500. Comparatively, Reeds has a beta of 0.54, suggesting that its share price is 46% less volatile than the S&P 500.

Summary

Coffee beats Reeds on 9 of the 14 factors compared between the two stocks.

About Coffee

Coffee Holding Co., Inc. engages in manufacturing, roasting, packaging, marketing, and distributing roasted and blended coffees in the United States, Australia, Canada, England, and China. It offers wholesale green coffee products, including unroasted raw beans that are sold to large, medium, and small roasters, as well as coffee shop operators; and roasts, blends, packages, and sells coffee under private labels in cans, brick packages, and instants of various sizes. The company also roasts and blends company label branded coffee to supermarkets, wholesalers, and individually owned stores; and sells tabletop coffee roasting equipment, instant coffees, and tea products for its customers. Its coffee brands include Cafe Caribe, Don Manuel, S&W, Cafe Supremo, Via Roma, Premier Roasters, and Harmony Bay. The company was formerly known as Transpacific International Group Corp and changed its name to Coffee Holding Co., Inc. in April 1998. Coffee Holding Co., Inc. was founded in 1971 and is headquartered in Staten Island, New York.

About Reeds

Reed's, Inc. engages in the manufacture and distribution of natural beverages in the United States. The company offers Reed's craft ginger beer; Reed's real ginger ales; Reed's Classic Mules; Reed's Hard Ginger Ale; Reed's ready to drink products; and Virgil's handcrafted sodas. It sells its products to natural food and gourmet retailers, grocery store chains, mass merchants, club stores, convenience and drug stores, liquor stores, industrial cafeterias, and on-premise bars and restaurants, as well as directly to consumers through www.drinkreeds.com. The company was formerly known as Original Beverage Corporation and changed its name to Reed's, Inc. in 2001. Reed's, Inc. was founded in 1987 and is headquartered in Norwalk, Connecticut.