CJBK Investment Analysis Report & Stock Research, Central Jersey Bancorp

A Word Of Caution

While we stand by our ratings methodology for long term value investors, sometimes smaller companies will be more volatile in terms of revenue, cash earnings, and other fundamental factors. Central Jersey Bancorp (CJBK) is such a stock. Because many micro-caps are lightly traded their stock price can fluctuate because of a single large trade. Also, there is less analyst coverage of such micro-caps and therefore less information from which to base our ratings.

While this company may not get as much press because of its small size, please take a moment to look at the RazorWire feed on the right hand side of the report. Any time Central Jersey Bancorp is mentioned on business television or influential blogs a clip of that will be displayed. This helps to bring you up to speed on any major issues they are facing right now, both positive or negative.

Therefore, (and as always), check additional sources and available information regarding CJBK before making an investment decision.

Ockham's Rating/Recommendation Summary

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CJBK Revenue

As a value investing shop, we are interested in seeing how CJBK's revenues measure up against past performances. One easily understandable way of doing that is to compare Price to Sales per share levels over a given time frame. Assuming it is available, Ockham prefers to look at ten years of history (for this stock there are 10 years of history available) and we weigh recent years more heavily. This allows us to find weighted average historical high and low Price to Sales ratios, which give us a better idea of the stock's current underlying value. Using this method, we have established a high range for Price to Sales of 3.70x and the low end of the range at 2.03x.

With respect to these historically rational metrics, notice that the current Price to Sales per share ratio for CJBK of 0.84x is well below its normal historic Price to Sales levels. At a price of $3.10, CJBK is 71% below where we would expect to see it. Clearly, this stock looks undervalued compared to historical levels, at least on a Price to Sales basis. This will positively affect our analysis because it is rare to find a stock this far below historical norms, and we would expect some price appreciation to bring this metric back towards a more normal range.

CJBK Cash Earnings

When reviewing a company and their prospects for success, it is necessary to analyze their ability to generate positive Cash Earnings. This is a vital component to our analysis, because as a long term investment research firm, there are few factors more closely tied to the valuation of a company as Cash Earnings. In the case of CJBK, it appears that either the current estimate for Cash Earnings is negative or CJBK is not likely to generate positive Cash Earnings based upon their prior performance in the last several quarters. Remember that Cash Earnings is not the only way to value a company's potential, but in our analysis it is the most important. Thus, for our analysis CJBK receives a negative score from a Cash perspective. At Ockham, we are fond of saying "Cash is King," and in this case the company is not generating any. If a company is not able to generate a profit then there is no reason to invest in them. Unless of course you believe in the story, and hope it will eventually lead to a profitable enterprise.

CJBK Dividends

A positive Ockham rating does not require a company to pay out an inviting dividend or a dividend at all. However, we believe dividends provide a useful measure of a company's inherent expectations. As of the time of this report, our data provider does not have historical data for CJBK. Therefore, we are not utilizing the dividends portion in our study. So, we do not know whether CJBK currently pays a dividend at present or not, we have an "expected dividend" payment listed in key fundamentals but cannot varify it.