Nathans Famous Inc (NATH)

Nathans Famous Inc. (NASDAQ: NATH) Stock Analysis

Company Profile:

History:

Nathan's Famous was founded in 1916 by Nathan Handwerker, a Polish immigrant, who started selling hotdogs from a pushcart on Coney Island. The company quickly gained popularity for its unique hot dogs and competitive hot dog eating contests. Today, Nathan's Famous is a publicly traded company with over 100 million hot dogs sold annually.

Core Business:

Nathan's Famous is primarily a franchisor and distributor of hot dogs, hamburgers, french fries, and other food items. They operate through two main segments:

• Franchise segment: Franchisor of 127 restaurants in 16 states and 8 countries.
• Wholesale segment: Distributor of their products to supermarkets, convenience stores, and other foodservice outlets.

Leadership:

• President & CEO: David P. Digiorgio
• CFO & Treasurer: Eric Gatoff
• EVP & Chief Restaurant Officer: James Walker

Top Products and Market Share:

Top Products:

• Nathan's Famous Beef Franks
• Other hotdogs (chicken, veggie, etc.)
• Hamburgers
• French fries
• Beverages

Market Share:

• Hot dogs: 4% market share in the US (2023)
• Hamburgers: negligible market share
• French fries: negligible market share

Financial Performance:

Recent Financial Statements:

Key Financial Highlights:

• Revenue has been declining in recent years.
• Net income and profit margins have also been decreasing.
• The company has a strong balance sheet with low debt levels.

Dividends and Shareholder Returns:

• Dividend History: Nathan's Famous has not paid a dividend since 2018.
• Shareholder Returns: Total shareholder return over the past 5 years is -30%.

Growth Trajectory:

Historical Growth:

• Revenue has grown at a compound annual growth rate (CAGR) of -1.5% over the past 5 years.
• Net income has declined at a CAGR of -5.1% over the past 5 years.

Future Growth:

• The company expects modest revenue growth in 2024.
• Growth initiatives include expanding the franchise network and introducing new menu items.

Market Dynamics:

Industry Overview:

• The hot dog industry is mature and competitive.
• Demand for hot dogs is driven by convenience and affordability.
• Health concerns and the rise of plant-based alternatives are potential challenges.

Competitive Landscape:

Key Competitors:

• Oscar Mayer (KRAFT)
• Ball Park (Tyson Foods)
• Hebrew National (Conagra Foods)
• Sabrett

Market Position:

• Nathan's Famous is a well-known and recognized brand in the hot dog industry.
• However, they face stiff competition from larger and more diversified companies.

Potential Challenges and Opportunities:

Challenges:

• Maintaining profitability in a competitive market.
• Keeping up with changing consumer preferences.
• Managing supply chain costs.

Opportunities:

• Expanding the franchise network.
• Developing new menu items.
• Leveraging the Nathan's Famous brand for other products.

Recent Acquisitions:

• Nathan's Famous has not made any acquisitions in the past 3 years.

AI-Based Fundamental Rating:

Rating: 5/10

Justification:

• The company has a strong brand and a loyal customer base.
• However, the industry is competitive and Nathan's Famous is facing challenges such as declining revenue and profitability.
• The company's future growth prospects are uncertain.

Sources and Disclaimers:

• This analysis is based on information from Nathan's Famous Inc.'s annual reports, SEC filings, and other publicly available sources.
• The information provided is for informational purposes only and should not be considered investment advice.
• Please consult with a financial professional before making any investment decisions.

Additional Notes:

• This analysis is based on data available as of November 10, 2023.
• The hot dog industry is constantly evolving, and this analysis may not reflect future developments.
• For the most up-to-date information, please refer to the company's website and financial reports.