Breaking Down Nathan's Famous, Inc. (NATH) Financial Health: Key Insights for Investors

Are you curious about the financial health of Nathan's Famous, Inc. (NATH)? As of fiscal year 2024, the company reported $138.61 million in revenue, marking a 6% increase from the previous year. But how does this translate into profitability and overall financial stability? While revenue increased, the income from operations saw a slight decrease to $32.51 million. With a declared quarterly cash dividend of $0.50 per share, is this a financially sound investment? Let’s dive into the key insights that can help investors make informed decisions.

Nathan's Famous, Inc. (NATH) Revenue Analysis

Nathan's Famous, Inc. (NATH) primarily generates revenue through several key streams. These include product sales from its branded hot dogs and related products, royalties earned from its licensing agreements, and revenue from its company-owned restaurants. Understanding the contribution of each stream is crucial for assessing the company's financial health.

Analyzing year-over-year revenue growth rates provides insights into Nathan's Famous, Inc.'s performance trends. Historical data reveals the percentage increase or decrease in revenue, highlighting periods of growth and potential challenges. Examining these trends helps investors understand the company's ability to expand its market presence and adapt to changing consumer preferences.

The contribution of different business segments to Nathan's Famous, Inc.'s overall revenue is an important factor. By identifying which segments are driving growth and which may be underperforming, investors can gain a clearer picture of the company's operational strengths and weaknesses. This analysis aids in making informed investment decisions.

Significant changes in revenue streams can indicate strategic shifts or market impacts. Monitoring these changes is essential for understanding how Nathan's Famous, Inc. is evolving and responding to industry dynamics. Such analysis can reveal the company's resilience and adaptability in a competitive landscape.

For a deeper dive into Nathan's Famous, Inc. (NATH) financial health, you can explore this comprehensive analysis: Breaking Down Nathan's Famous, Inc. (NATH) Financial Health: Key Insights for Investors

Nathan's Famous, Inc. (NATH) Profitability Metrics

Assessing the profitability of Nathan's Famous, Inc. (NATH) involves scrutinizing its gross profit, operating profit, and net profit margins. These metrics provide insights into the company's efficiency in generating earnings relative to its revenue and costs. Analyzing these figures over time helps identify trends and potential areas for improvement. When evaluating Nathan's Famous, Inc. (NATH), comparing its profitability ratios with industry averages offers a benchmark to gauge its competitive positioning and overall financial health. Additionally, examining operational efficiency, such as cost management and gross margin trends, sheds light on the company's ability to control expenses and maximize profitability. For deeper insights into the company's foundational principles, refer to Mission Statement, Vision, & Core Values of Nathan's Famous, Inc. (NATH).

Here's a breakdown of key profitability metrics for Nathan's Famous, Inc. (NATH):

• Gross Profit: This is the revenue a company has left after deducting the cost of goods sold (COGS). It indicates how efficiently a company manages its production costs.
• Operating Profit: This is the profit earned from a company's normal business operations, before deducting interest and taxes. It reflects the company's ability to generate profit through its core business activities.
• Net Profit: This is the profit remaining after all expenses, including interest, taxes, and other overheads, have been deducted from total revenue. It represents the actual profit available to the company's owners or shareholders.
• Profit Margins: These are ratios that compare profit to revenue. Common profit margins include gross profit margin (gross profit/revenue), operating profit margin (operating profit/revenue), and net profit margin (net profit/revenue). They provide insights into the percentage of revenue that turns into profit at different stages.

To provide a clearer picture, profitability can be compared with industry averages using a table, although specific figures require up-to-date financial data.

Note that the illustrative figures above are not based on the 2024 fiscal year data. It is essential to consult the latest financial reports and industry data for an accurate comparison.

Nathan's Famous, Inc. (NATH) Debt vs. Equity Structure

Understanding the financial health of Nathan's Famous, Inc. (NATH) requires a close look at its debt and equity structure. This involves assessing the company's debt levels, key ratios, and how it strategically balances debt and equity financing.

As of the most recently reported fiscal year ending March 31, 2024, Nathan's Famous, Inc. (NATH) had a Debt to Equity Ratio of -1.81. This negative ratio indicates that the company's liabilities exceed its assets.

Here's a detailed look at Nathan's Famous, Inc.'s (NATH) debt levels:

• Total debt for the fiscal quarter ending in December 2024 was reported at $51.06 million.
• Total debt for fiscal years ending March 2020 to 2024 averaged $116.3 million.
• The total debt hit a 5-year low in March 2024 at $66.386 million.

The company's debt-to-equity ratio further highlights its financial leverage:

• The debt-to-equity ratio is -268.9%, stemming from a total shareholder equity of -$19.0 million and total debt of $51.1 million.
• This negative shareholder equity is a critical factor, indicating a potentially serious financial situation.

To provide a clearer picture, here's a table summarizing key solvency measures:

In September 2024, S&P Global Ratings withdrew all ratings on Nathan's Famous, Inc. following a debt refinancing where the company repaid all of its rated debt. Before the withdrawal, the issuer credit rating was 'B' with a positive outlook. The company's interest coverage ratio is 9.3, with an EBIT of $36.9 million.

For more insights into the company's strategic direction, see Mission Statement, Vision, & Core Values of Nathan's Famous, Inc. (NATH).

Nathan's Famous, Inc. (NATH) Liquidity and Solvency

Liquidity is the capability of Nathan's Famous, Inc. (NATH) to satisfy its short-term obligations, while solvency reflects its long-term financial viability. Analyzing key financial ratios and statements provides insights into the company's financial health.

Assessing Nathan's Famous, Inc.'s Liquidity:

To evaluate the liquidity of Nathan's Famous, Inc. (NATH), we look at the current and quick ratios, working capital trends, and cash flow statements.

Current and Quick Ratios:

• Current Ratio: The current ratio measures a company's ability to pay short-term obligations with its current assets. As of December 29, 2024, Nathan's Famous, Inc. (NATH) had a current ratio of 2.71. This indicates a strong liquidity position, suggesting the company has $2.71 in current assets for every $1 of current liabilities.
• Quick Ratio: The quick ratio, which excludes inventory from current assets, provides a more conservative view of liquidity. For the same period, Nathan's Famous, Inc. (NATH) reported a quick ratio of 2.62. This shows that even without relying on inventory, the company has $2.62 in liquid assets to cover each $1 of current liabilities.

Analysis of Working Capital Trends:

Working capital, calculated as current assets minus current liabilities, is an essential measure of operational liquidity. As of December 29, 2024, Nathan's Famous, Inc. (NATH) had a working capital of $17.9 million. Monitoring the trend of working capital helps in understanding if the company's short-term financial health is improving or deteriorating.

Cash Flow Statements Overview:

• Operating Cash Flow: For the fiscal year 2024, Nathan's Famous, Inc. (NATH) generated $7.8 million in cash from operating activities. This positive cash flow indicates the company's core business operations are a reliable source of cash.
• Investing Cash Flow: The investing activities used cash of $0.8 million in 2024. These activities primarily include investments in property and equipment.
• Financing Cash Flow: Financing activities used cash of $1.8 million. This includes repayments of finance lease obligations.

Potential Liquidity Concerns or Strengths:

Nathan's Famous, Inc. (NATH) exhibits several liquidity strengths based on the 2024 fiscal year data:

• Strong Current and Quick Ratios: Both ratios are well above 1, indicating a robust ability to meet short-term obligations.
• Positive Operating Cash Flow: The company's operations generate a healthy cash flow, supporting day-to-day activities and investments.
• Adequate Working Capital: A substantial working capital position provides a buffer for managing short-term liabilities.

Here's a summary of key liquidity metrics for Nathan's Famous, Inc. (NATH) as of December 29, 2024:

In conclusion, Nathan's Famous, Inc. (NATH) demonstrates a strong liquidity position, supported by healthy ratios, positive operating cash flow, and sufficient working capital. These factors suggest the company is well-equipped to meet its short-term financial obligations.

Explore more about Nathan's Famous, Inc. (NATH) investor profile: Exploring Nathan's Famous, Inc. (NATH) Investor Profile: Who’s Buying and Why?

Nathan's Famous, Inc. (NATH) Valuation Analysis

Determining whether Nathan's Famous, Inc. (NATH) is overvalued or undervalued requires analyzing key financial metrics and market data. This includes examining valuation ratios, stock performance, dividend information, and analyst ratings.

Here's a breakdown of factors to consider:

Valuation Ratios:

• Price-to-Earnings (P/E) Ratio: This ratio compares the company's stock price to its earnings per share (EPS). A lower P/E ratio might suggest undervaluation, while a higher ratio could indicate overvaluation, relative to industry peers or historical averages.
• Price-to-Book (P/B) Ratio: The P/B ratio compares the market capitalization of Nathan's Famous, Inc. to its book value of equity. A lower P/B ratio may indicate that the stock is undervalued.
• Enterprise Value-to-EBITDA (EV/EBITDA): This ratio compares the company's enterprise value (market cap plus debt, minus cash) to its earnings before interest, taxes, depreciation, and amortization (EBITDA). It provides a valuation measure that is independent of capital structure and accounting decisions.

Stock Price Trends:

Analyzing Nathan's Famous, Inc.'s stock price movement over the past year or longer can reveal trends and potential turning points. Significant price increases might suggest growing investor confidence, while declines could indicate concerns about the company's prospects.

Dividend Yield and Payout Ratios:

As of April 2025, it is important to check the most recent dividend yield and payout ratio (if applicable) for Nathan's Famous, Inc.. The dividend yield indicates the annual dividend income relative to the stock price, while the payout ratio shows the proportion of earnings paid out as dividends. These metrics can influence investor perception of the stock's attractiveness.

Analyst Consensus:

Keep an eye on analyst ratings and price targets for Nathan's Famous, Inc.. These assessments reflect the collective opinion of financial analysts regarding the stock's potential. A consensus of 'buy' ratings suggests a positive outlook, while 'hold' or 'sell' ratings may indicate concerns about valuation or growth prospects.

For more insights into Nathan's Famous, Inc. (NATH) and its investors, check out: Exploring Nathan's Famous, Inc. (NATH) Investor Profile: Who’s Buying and Why?

Nathan's Famous, Inc. (NATH) Risk Factors

Nathan's Famous, Inc. (NATH) faces a variety of risks that could significantly impact its financial health. These risks span internal operational challenges and external market dynamics, including intense industry competition, regulatory changes, and fluctuating market conditions.

Here's a breakdown of key risk areas:

• Industry Competition: The restaurant and food service industry is highly competitive. Nathan's Famous, Inc. (NATH) competes with a wide range of businesses, from fast-food chains to local eateries. Increased competition could lead to lower sales, reduced market share, and decreased profitability.
• Regulatory Changes: Changes in food safety regulations, labor laws, and health codes can increase compliance costs and operational burdens. For example, new regulations on nutritional labeling or minimum wage increases could impact the company's financial performance.
• Market Conditions: Economic downturns, changes in consumer preferences, and fluctuations in commodity prices can all affect Nathan's Famous, Inc. (NATH)'s revenue and profitability. A decrease in consumer spending or a shift towards healthier eating habits could negatively impact sales.

Operational, financial, and strategic risks are often detailed in Nathan's Famous, Inc. (NATH)'s earnings reports and filings. These may include:

• Supply Chain Disruptions: Disruptions in the supply chain, such as shortages of key ingredients or increased transportation costs, can impact the company's ability to maintain consistent product quality and manage costs effectively.
• Franchise Management: As a franchisor, Nathan's Famous, Inc. (NATH) relies on its franchisees to maintain brand standards and operate efficiently. Issues with franchisee performance or compliance can negatively impact the company's reputation and financial results.
• Intellectual Property Protection: Protecting the brand's intellectual property, including trademarks and recipes, is crucial. Infringement by competitors or unauthorized use of the brand could dilute its value and harm the company's competitive position.

Mitigation strategies and plans to address these risks may include:

• Diversifying Supply Chains: Sourcing ingredients from multiple suppliers can reduce the risk of disruptions and ensure a stable supply of key inputs.
• Enhancing Franchisee Training and Support: Providing comprehensive training and ongoing support to franchisees can improve operational efficiency and ensure compliance with brand standards.
• Investing in Brand Protection: Actively monitoring and enforcing intellectual property rights can help protect the brand's value and prevent unauthorized use.

Understanding these risks and mitigation strategies is essential for investors seeking to assess the financial health and long-term prospects of Nathan's Famous, Inc. (NATH). For more insights, you can read: Breaking Down Nathan's Famous, Inc. (NATH) Financial Health: Key Insights for Investors

Nathan's Famous, Inc. (NATH) Growth Opportunities

Nathan's Famous, Inc. (NATH) has several avenues for future growth, stemming from strategic initiatives, market positioning, and brand recognition. The company's focus on expanding its reach through various channels and adapting to consumer preferences positions it for continued success.

Key growth drivers for Nathan's Famous, Inc. (NATH) include:

• Product Innovation: Nathan's Famous is focused on introducing new menu items to meet changing consumer tastes, including vegetarian options and gourmet hot dogs. They balance traditional hot dog recipes with modern culinary innovations, launching 3 unique menu items in 2024, supported by a $2.1 million R&D investment.
• Market Expansion: The company is actively expanding its presence both domestically and internationally. As of 2024, Nathan's Famous operates in 19 countries and distributes its products across 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, and Guam.
• Franchise Development: Nathan's Famous is strategically expanding through franchise development, retail product distribution, and international market penetration. They are actively seeking additional franchisees to partner with to continue growth.
• Strategic Partnerships: The company leverages master franchise relationships to expand internationally, planning to open brick-and-mortar and sub-franchise locations in Brazil by the end of 2024. They also intend to open several virtual kitchen locations in the UAE.

Future revenue growth projections and earnings estimates reflect a positive outlook:

• In the fiscal year ending March 31, 2024, Nathan's Famous had annual revenue of $138.61 million, with 5.98% growth.
• Revenue for the quarter ending December 29, 2024, was $31.52 million, representing 9.10% growth.
• The company's revenue in the last twelve months reached $146.39 million, a 6.83% year-over-year increase.
• For the first half of fiscal year 2025, revenues reached $85.9 million, up from $80.7 million, while net income increased to $15.3 million ($3.74 per share).

Strategic initiatives and partnerships driving future growth include:

• International Expansion: Continued expansion through master franchise relationships in countries like Brazil, the United Kingdom, Egypt, and Ukraine.
• Virtual Kitchens: Opening virtual kitchen locations in regions like Belgium, France and the UAE to meet increasing consumer demand.
• Retail Expansion: Expanding into retail by offering Nathan's Famous products in grocery stores across Brazil, starting in April 2024.
• Digital Initiatives: Investing in digital marketing efforts, including social media and targeted advertising campaigns, to align with changing consumer behaviors.

Nathan's Famous, Inc. (NATH) possesses several competitive advantages that position the company for growth:

• Brand Recognition: A well-recognized hot dog brand with a history dating back to 1916, known for its authentic flavor and cultural significance.
• Licensing Agreements: High-margin licensing business, particularly through agreements with Smithfield Foods, Inc., providing a consistent revenue stream. License royalties increased to $22.412 million during the first half of fiscal year 2025.
• Multi-Channel Distribution: Products are sold in approximately 78,000 locations, including supermarkets, mass merchandisers, club stores, and high-traffic venues like sports stadiums and airports.
• Franchise Network: A strong franchising network that provides stable royalty income, with new franchised locations opening, including internationally.

The following table summarizes key financial data for Nathan's Famous, Inc. (NATH) in fiscal year 2024:

For more insights into Nathan's Famous, Inc.'s mission, vision, and core values, you can explore Mission Statement, Vision, & Core Values of Nathan's Famous, Inc. (NATH).