national presto: reasonable valuation, successful strategy - water absorbent products
National Park (NYSE:NPK)
A household goods and small household appliances company integrating national defense and absorbing products, established in 1905, producing industrial products
Size of pressure tank.
The company started a stew.
In 1939, a pressure cooker called "Presto" soon became synonymous with American home pressure cookers.
During World War II, the company contributed to the war effort by converting almost all production into making artillery fuses, aerial bombs and rocket fuses.
NPK's innovations and products over the next few decades include: the company has been guided by conservative management.
Marijo Cohen, who became CEO in 1994, has been working for the company since 1976.
She is Melvin Cohen's daughter, who joined the company in 1944 as a customer service manager (
He married the daughter of major shareholder Lewis Philip).
Lewis Philip bought a large stake in 1942, when the NPK was on the verge of bankruptcy after the domestic product aluminum was cut.
Melvin Cohen became president in 1960, and during his early tenure, Benjamin Graham, the master of value investment, awarded him the "best" award.
"Smart investors ".
Warren Buffett also held a stake in the NPK in the 1970 s.
The company's main business strategy in 1980 and 1970 includes the introduction of new products, obtaining patents for the technology developed, and resisting imitation competitive products through litigation.
Not all products are commercially successful, and the company holds a lot of cash to help get through the difficult stages of the business.
In 1999, the SEC launched a survey to determine whether, under the Act, the state Presto should be designated as an investment company under the Investment Company Act of 1940, companies holding more than 40% of their investment securities assets may be re-classified as investment companies and may comply with the additional provisions of the SEC.
On 2002, the SEC requested Presto to register as an investment company and filed a lawsuit against its refusal.
The defense of the NPK is that it is only very cautious and finds it difficult to find a capital planting area where business can be developed.
On 2005, the company was registered as an investment company when the district court lost its case.
But in 2007, the NPK won the lawsuit when the Court of Appeal ruled that the SEC would take the national interest severely.
In the end, it turned out to be nothing.
The company can also easily apply for an exemption from rule 40%, a process successfully completed by other companies, thus avoiding litigation and its associated costs.
Over the past decade, the company has diversified into defense and absorbed products by investing in a group of companies.
In addition, in lieu of cash generated by hoarding, the NPK pays special dividends in addition to regular dividends per year based on income.
Prepresto's home appliances and appliances business relies on the ability to innovate and develop new product designs that can be produced and sold.
A key aspect of this plan is the ability to protect intellectual property.
NPK has been relatively successful in obtaining key technology patents and actively defending key technologies through legal channels.
With the consolidation of the industry, the NPK faces competition from large manufacturers with more resources than the Presto sector in this country.
As large manufacturers gain a competitive advantage, it is difficult for NPK to compete in this market, which is only a matter of time: the self-owned brand products of large retailers are the main competitive threats of NPK.
A retailer can only make a profit by directly reaching manufacturers in China and other countries with low production costs.
In the long run, the service and warranty plan is an area where National Presto remains competitive.
It is unclear whether management will invest heavily in changing the business model of the department.
National Presto's defense products division consists of three acquisitions of products: the backbone of this business unit is five acquisitions
The annual key contract for the management and production of the Army 40mm ammunition system was initially signed in 2005 and renewed in 2010 for another five years.
The obvious risk is that the government can choose to terminate the contract at any time and rely on the Ministry of Defense.
In addition, these contracts are fixed prices and the only protection measures are some limited upgrade terms for steel, aluminum and zinc prices.
National Presto's absorption products division is a business unit established in 11/2001 when purchasing the assets of RMED International, a private label diaper manufacturer.
The company also purchased assets from NCH Hygienic Products, Inc. , a 10/2003-year-old manufacturer of adult incontinence Products.
Unlike other units of the NPK, this business unit is capital-
Intensive, need to use highcost, high-Speed equipment.
It's a relatively new business for the company, and it's trying to be a player serving babies --
The demographic boom is about to retire.
The idea may be profitable, but it depends on how the management implements the strategy.
The company has little business outside the United States and Canada.
This is a legacy of a conservative management style that avoids investments involving any risk.
This method may cause the company to miss-
In a huge global market.
The following table summarizes the financial position of the National Presto: the financial position of the NPK indicates the overall slowdown trend.
The 1st and 2nd quarter 2011 report showed a further slowdown in the overall business-the defense sector grew well and the household goods sector fell year on year.
The absorption business indicates an increase in revenue, but a decrease in profitability due to increased material costs-fire in product facilities also results in a decrease in revenue.
The following spreadsheet shows a summary of our quantitative rating of the country Presto (
Click here to learn about the rating on this spreadsheet;
Click to enlarge the picture)
: 8 points in pressto nationwide.
25/10 about its ability to beat inflation: stock returns and free cash flow are perfect.
Healthy net profit margin. PEG ratio (5-year projected)
Since the stock is not widely watched and the company does not give guidance, it is only a guess at best-OFB gives an average.
Due to outstanding executive pay, the company's abuse rating was 10/10: CEO Marijo Cohen made $631, about 15 times that of regular workers.
Her salary has increased over the past few years.
Before that, she was one of the top paid CEOs in the United States.
She controls about 30% of the outstanding shares.
The income-generating and liquidity indicators were below average at 3.
33/10: The National Presto has outstanding dividends 8.
60% includes special dividends paid annually based on profitability.
Inventory is not optional, however, with an average daily volume of 27,688, which means it is not liquid.
Volatility ranks well above the average of 10/10: NPK has no debt, beta is not repaid, and there has been an annual revenue increase over the past 5 years.
The ability to increase the dividend score is 7/10: NPK pays out most of the income as dividends and special dividends, so the payment ratio is very high, accounting for the low score there.
In the past 5 years, the growth of dividends and earnings has been amazing.
The overall quantitative rating or "ofb factor" is 7 points.
72/10, above average.
Prepresto is valued at $550.
Assuming revenue will drop around 20% this year, 61 M and a forward PE of about 14.
Especially when $113 ($16. 51 per share)
The total amount of cash in the balance sheet was taken out.
The company said slight sales rose 1st year-on-year in the 2011 quarter, but revenue fell by about 14%, mainly due to an increase in raw material costs.
Sales and revenue fell 2nd and 16% in the 28% quarter, respectively, worse.
Nevertheless, assuming that the cost of raw materials is stable over the years, the valuation seems very reasonable.
As the company's revenue growth rates in various sectors have shown, National Presto's strategy of diversifying into the defense and absorption sectors is achieving results.
Both areas are attractive because the defense business provides quite a bit of stability, while the defense business provides opportunities for growth as the projected demand for products such as babies growsboomers retire.
These businesses have their associated risks, but the different nature of these businesses should give NPK a degree of isolation.
Stocks in the National Presto have low liquidity and high short positionsinterest.
The stock is currently down about 45% from 52-week and all-time highs.
Our quantitative analysis of OFB shows that
Average rating of the company.
Because of the reasonable valuation, we think this stock should be very suitable for small businesses.
The upper limit of the diversified portfolio.
Broke the news: I long NPK.