NATH  Nathan's Famous Inc.

Exchange

NASDAQ

Sector

Consumer Services

Industry

Restaurants

Market Cap.

260.79M

Vuru Grade

50.61/100

Current Price

$62.45
+0.25 (+0.40%)

Growth Price

$14.73
Overvalued by 76.42%

Stability Price

$20.07
Overvalued by 67.86%

Company Metrics

  • P/E 36.27
  • P/S 2.69
  • P/B 3
  • EPS 1.72
  • Cash ROIC 69.13%
  • Cash Ratio 4.48
  • Dividend 0.00 / 0.00 %
  • Avg. Vol. 8,470.00
  • Shares 4.18M
  • Market Cap. 260.79M

Company Description

Nathan's Famous, Inc., together with its subsidiaries, engages in marketing Nathan's Famous brand, and selling products bearing the Nathan's Famous trademarks through various distribution channels in the United States and internationally. The company operates and franchises quick-service restaurant units that features Nathan's beef hot dogs, crinkle-cut french-fries, and other menu offerings under... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

News Nathan's Famous Inc.NATH
Wall Street Journal - Feb 13, 2011
News Nathan's Famous Inc.NATH. Significant News Only. 11/20/16; The Wall Street Journal. What Iconic Franchises Looked Like at the Very Beginning.
Why Nathan's Famous, Inc. Stock Popped Today
Motley Fool - Feb 27, 2015
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
Nathan's Brings Hot Dogs to Junk-Bond Market With Inaugural Sale - Bloomberg
Why You Should Avoid Nathan's Famous
Seeking Alpha (registration) - Mar 11, 2015
I've spent a fair amount of time trying to figure out what management of Nathan's Famous (NASDAQ:NATH) is thinking by taking on a massive amount of debt and then paying a huge dividend.
Nathan's Famous Shareholders Are About To Get Barbecued
Seeking Alpha - Jun 18, 2015
In my last Nathan's Famous (NASDAQ:NATH) article I tried to warn shareholders of what I see as coming doom. Interest expense starting with the new quarter's report will go through the roof, likely cutting net income in half, but I don't think I made ...
Nathan's Famous: The Real Impact Of Recent Dividend Payouts
Seeking Alpha - Nov 1, 2015
The new deal with John Morell & Co., has boosted their revenue as well as their operating income. There has been much controversy over their decision to pay $25 per share in dividends by taking on an annual interest expense of $13.5 million.
The Earnings of Nathan's Famous Will Soon Explode and Nobody Has Noticed
Motley Fool - Jun 28, 2014
For years, Nathan's had an agreement with a company called "SMG Inc" under which it was the company's exclusive manufacturer and distributor of products for which it paid Nathan's a 4.5% royalty for using the brand. I happen to love royalty agreements ...
Nathan's Famous, Inc. (NATH) Ex-Dividend Date Scheduled for March 30, 2015
Nasdaq - Mar 27, 2015
Nathan's Famous, Inc. ( NATH ) will begin trading ex-dividend on March 30, 2015. A cash dividend payment of $25 per share is scheduled to be paid on March 27, 2015.
Shares in Focus: Nathan's Famous, Inc. (NASDAQ:NATH)
BVN - 10 hours ago
Looking at some stock volatility information, Nathan's Famous, Inc. (NASDAQ:NATH)'s 12 month volatility is 31.363200.
Nathan's Famous: Shares Are Undervalued When Assuming Growth Will Continue
Seeking Alpha - Oct 5, 2015
"Nathan's Famous ("NATH") is a well‐known brand name for hot dogs sold at company‐owned and franchised restaurants, through food service programs and via licensing activities.
Stock Returns: Nathan's Famous Inc (NASDAQ:NATH) is Beating Luby's Inc (NYSE:LUB)
CML News - Feb 10, 2017
This is a snapshot to compare the stock returns for Luby's Inc (NYSE:LUB) versus Nathan's Famous Inc (NASDAQ:NATH) .
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for NATH to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate NATH's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$62.45 Current Price

$14.73 Growth Price (DCF)

Overvalued by 76.42%


Growth Rate Assumed by Market: 36.62%


Future Free Cash Flow Growth Rate: 15.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$20.07 Stability Price (EPV)

Overvalued by 67.86%


Discount Rate: 15.0%

$-40.28 Book Price

Overvalued by 164.50%


Varying Cash Return on Invested Capital over the past 5 years

NATH has efficiently invested its financial resources in buildings, projects, and equipment, resulting in strong returns. However, there is a substantial variation in their Cash ROIC from year-to-year. This company may have unreliable free cash flow or operates in a business where invested capital costs increase substantially on a sporadic basis. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

NATH has created $69.13 of cash for every $100 invested.
Figures in USD. Fiscal year ends in March
20122013201420152016
Free Cash Flow 8.25M 8.50M -1.46M 11.75M 11.36M
divided by
Invested Capital 10.22M 10.49M 13.06M 14.17M 10.12M
Cash ROIC 80.76% 81.00% -11.20% 82.88% 112.19%

Shrinking Return on Equity over the past 5 years

NATH has been shrinking returns with capital that shareholders have invested. This is a negative sign and demonstrates that both the business and management performance are weakening over time.

NATH has generated $12.44 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in March
20122013201420152016
Net Income 6.16M 7.47M 8.33M 11.70M 6.10M
divided by
Stockholders' Equity 28.84M 34.15M 43.90M -59.91M -72.34M
Return on Equity 21.35% 21.87% 18.97% - -

Excellent Business Performance over the past 10 years

NATH has been able to maintain profitability in good times and bad. This could mean NATH has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

NATH has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in March
2007200820092010201120122013201420152016
Free Cash Flow 7.65M 3.88M 3.59M 5.00M 5.98M 8.25M 8.50M -1.46M 11.75M 11.36M

Very Weak Balance Sheet

NATH is in a poor financial position. This could be due to a slowdown in sales, indulging in debt-fuelled growth, or the nature of NATH's business. If it is highly capital intensive (see Economic Moat), they likely have to outlay significant capital just to stay competitive. This habit often destroys more value than it creates.
Figures in USD. Fiscal year ends in March
2007200820092010201120122013201420152016
Cash 29.72M 35.33M 34.35M 35.93M 27.85M 20.74M 25.71M 33.26M 58.48M 50.23M
Current Assets 36.82M 42.78M 42.20M 43.82M 44.42M 35.55M 40.99M 45.19M 73.61M 60.98M
Total Assets 46.58M 51.20M 49.82M 53.37M 52.96M 44.52M 49.66M 56.14M 84.67M 71.55M
Current Liabilities 9.45M 7.13M 6.90M 7.16M 12.97M 13.56M 13.46M 9.81M 12.01M 11.20M
Total Liabilities 10.70M 8.59M 7.98M 9.06M 14.88M 15.68M 15.51M 12.24M 144.57M 143.89M
Stockholder' Equity 35.88M 42.61M 41.85M 44.31M 38.08M 28.84M 34.15M 43.90M -59.91M -72.34M
Current Ratio 3.90 6.00 6.12 6.12 3.43 2.62 3.04 4.61 6.13 5.44
TL-to-TA 0.23 0.17 0.16 0.17 0.28 0.35 0.31 0.22 1.71 2.01

Consistent Reinvestment of Profits over the past 10 years

NATH has consistently retained profits. This may put NATH in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, NATH can greatly improve their long-term economic picture.
Figures in USD. Fiscal year ends in March
2007200820092010201120122013201420152016
Retained Earnings -2.65M 3.75M 11.23M 16.80M 19.01M 25.17M 32.64M 40.96M -63.44M -57.35M
Retained Earnings Growth - 241.15% 199.73% 49.60% 13.17% 32.39% 29.67% 25.51% -254.88% 9.61%

Potential Competitive Advantage over the past 10 years

NATH potentially has a competitive advantage. This could be strong branding, the ability to keep costs low, or some other characteristic that is hard to replicate. Look at its future prospects to determine sustainability and whether the economic moat will strengthen.

$10.36 of every $100 of Revenue have been pure profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in March
2007200820092010201120122013201420152016
Net Income 5.54M 6.56M 7.48M 5.57M 2.21M 6.16M 7.47M 8.33M 11.70M 6.10M
divided by
Revenue 45.73M 47.40M 49.22M 50.88M 57.26M 66.22M 71.54M 82.93M 99.11M 100.89M
Net Profit Margin 12.12% 13.83% 15.20% 10.95% 3.87% 9.30% 10.44% 10.04% 11.81% 6.04%

Varying Pricing Power over the past 10 years

NATH has maintained substantial gross margins, suggesting that they have been able to set prices without consideration of the cost of goods sold. However, there is a substantial variation in their Gross Profit Margins from year-to-year, which indicates inconsistent performance. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

$44.68 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in March
2007200820092010201120122013201420152016
Gross Profit 18.46M 20.33M 20.45M 22.36M 22.69M 66.22M 23.97M 26.71M 33.41M 39.34M
divided by
Revenue 45.73M 47.40M 49.22M 50.88M 57.26M 66.22M 71.54M 82.93M 99.11M 100.89M
Gross Margin 40.36% 42.88% 41.54% 43.96% 39.63% 100.00% 33.50% 32.21% 33.71% 38.99%

Low Capital Intensity over the past 10 years

NATH has consistently used a small portion of their Net Income buying new equipment or investing in new facilities. This indicates that NATH may require minimal investment to stay competitive. This leaves them with extra money to spend on growing their business and potentially buying back stock.

24.61% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in March
2007200820092010201120122013201420152016
Capital Expenditure 545,000.00 972,000.00 513,000.00 2.18M 1.25M 1.36M 998,000.00 4.34M 1.54M 1.13M
divided by
Net Income 5.54M 6.56M 7.48M 5.57M 2.21M 6.16M 7.47M 8.33M 11.70M 6.10M
Capital Expenditure Ratio 9.83% 14.83% 6.86% 39.22% 56.26% 22.05% 13.36% 52.11% 13.14% 18.45%

No Dividend History over the past 10 years

NATH has never distributed dividends or has recently suspended their dividend distribution.
Figures in USD. Fiscal year ends in March
2007200820092010201120122013201420152016
Dividend Paid - - - - - - - - - -
divided by
Shares Outstanding 6.34M 6.50M 6.18M 5.72M 5.50M 5.05M 4.59M 4.61M 4.59M 4.46M
Dividend Paid Per Share - - - - - - - - - -
Price at Year End 17.14 12.11 15.27 16.73 21.02 33.65 50.69 80.00 50.81 64.90
Dividend Yield - - - - - - - - - -

Strong History of Stock Buybacks over the past 10 years

NATH has a strong history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in March
2007200820092010201120122013201420152016
Shares Outstanding 6.34M 6.50M 6.18M 5.72M 5.50M 5.05M 4.59M 4.61M 4.59M 4.46M
Stock Bought Back - -2.48% 5.21% 8.12% 3.85% 9.01% 10.05% -0.37% 0.37% 2.80%
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