For Income Investors:
National Presto |  - Co. Spotlights available via RSS feed
| Yes, We Probably Make That |  
|
Income is a big part of investors' returns. Stocks, mutual funds and fixed income ideas in this column are featured because they are relatively solid in their ability to pay dividends or interest. We're giving income investors a resource to start their research for investments that give better yields with lower risk. | | NPK | $113.40 | Why It's Featured: Diverse revenue base; Solid balance sheet.
Keep an Eye On: Sales momentum. | Dividend Yield | 5% | | Dividend/Earnings | .64 | | Financial Strength | B++ | | Div. Date: Mar | Ex-Div: Feb |
January 28, 2010 - National Presto Industries, Inc. (NPK-NYSE) and its subsidiaries manufacture housewares/small appliances, defense products, and absorbent products. The company operates in three segments: Housewares/Small Appliance, Defense Products, and Absorbent Products.
The Housewares/Small Appliance segment designs, markets, and distributes housewares and small electrical appliances, including pressure cookers and canners, kitchen electrics, cutting centers, the Presto Control Master heat control single thermostatic control line of fry pans and multi-purpose cookers, deep fryers, non-die cast fryers, heaters, and comfort appliances. Its products also include hamburger cookers, waffle makers, pizza ovens and slicer/shredders, curly cutters, electric heaters, cornpoppers (hot air and microwave), microwave bacon cookers, coffeemakers and accessories, single serve coffee pot holders, electric tea kettles, griddles, die cast deep fryers, skillets, multi-cookers, stamped cookers, electric peelers, electric knife sharpeners, shoe polishers,and timers. This segment sells products directly to retailers in the United States and also through independent distributors. The Defense Products segment manufactures precision mechanical and electro-mechanical products for the U.S. Department of Defense (DOD) and DOD prime contractors. Its products include training ammunition, fuses, firing devices, initiators, and medium caliber cartridge cases. This segment also performs load, assemble, and pack operations on ordnance related products. The Absorbent Products segment manufactures and sells private label adult incontinent products and diapers. National Presto Industries, Inc. was founded in 1905 and is based in Eau Claire, Wisconsin. I put this stock in the Company Spotlight in July of 2009. It was $77 at the time and yielded 7.3%. It's gone nowhere but up since then. So now it's in the Income column because the yield is still decent (5%), but can it still go higher? 2009 may have been the best year in the company's history. The 2 analysts who follow the stock think earnings totaled $8.95, well above the $6.45 in 2008. For 2010, they see earnings at $9.52. Revenues hit a record as well. Estimates are for the final tally to be $479.1 million. Next year, the guess is for $533.20 million. So, yes, this is still a small company, but it's growing nicely and in all the right ways. Houseware/Small Appliance did well as consumers stayed home and cooked more to save money in this difficult economy. The Defense and Absorbent Products also saw higher demand. All three divisions contributed to the record year. Higher profitability came from lower material and shipping costs as well as a higher margined mix for Defense products. Reductions in material and shipping costs will go only so far. They can't keep heading down. Management knows this. It's focusing on the manufacturing process and the types of products National makes as a way of bolstering margins. Furthermore, if the economy is really off the bottom and starting to recover, the Housewares/Small Appliances division should see continued rising demand. The dividend here is a little different. There's an annual dividend rate of $1.00, paid in March. But there's also a bonus dividend. For the last 4 years, total dividends were: $2.12, $3.80, $4.25, and $5.55. This year, the estimate is for a total of $5.40. More numbers: Market Cap is $777.47 million. Forward P/E is 11.91. Price to sales is 1.63 while Price to book is 2.47. Book value is $45.80.
Operating margin for the last 12 months was 17.96% while Profit margin was 12.39%. Return on equity was 19.49%. There is no debt on the books. There's $132.46 million in cash for $19.32 a share. Current ratio is 5.93. There are only 6.86 million shares outstanding and a float of 4.79 million. Insiders own 30.10%. Institutions have 52.9% of the stock.
Everything looks good here. But be aware the stock doubled since it hit a 52-week low in March of 2009. Investors like this stock. And there isn't much of it to go around with only 4.79 million shares in the float. That works well on the upside as demand can push the price up fast. On the way down, it can really hurt as there are fewer buyers of small float stocks. For now, everything looks good with earnings set to break another record next year. We'll see if the company can deliver. - Company Web site: www.gopresto.com - Ted Allrich |
Weekly Newsletter
printer-friendly format