Pencils Palace
Hot Dog! Nathan's Famous Reports

Related Links
Discussion Boards

By pencils2
November 6, 2007

Posts selected for this feature rarely stand alone. They are usually a part of an ongoing thread, and are out of context when presented here. The material should be read in that light. How are these posts selected? Click here to find out and nominate a post yourself!

Today Nathan's Famous reported 2Q 2008 results.

** Revenue up 12.2% to $14.06 million from $12.53 million in 2Q 2007
** Branded Product Program sales up 11.9% to $11.12 million in the first two quarters of fiscal 2008 from $9.94 million in first two quarters of fiscal 2007

** Income from continuing operations up 20.1% to $1.77 million ($0.27 per share) from $1.48 million ($0.24 per share) in 2Q 2007
** Profit margin 12.15% from 11.78% in 2Q 2007
** Diluted share count 6,562,000

** Authorized new plan for the company to purchase up to 500,000 shares of stock

Press release

Nathan's doesn't give too much information in their press releases (we'll have to wait for the 10-Q to be filed), but from they have given us I'm pleased with. Earnings continue to grow at a respectable rate and sales are growing at a decent rate as well. The profit margin has again improved which is always a good thing to see. But what I really want to see is some sign that management is looking for ways to reinvest the company's large cash position into the business one way or another. The new stock repurchase plan is a start, but that isn't something that will directly help the business. I want to see new restaurants being put up, improvements in current restaurants, expanding the Branded Product Program, just something to give the company a little more opportunity for long-term success. I think management will eventually do something, but from they way I see it the sooner the better. Nathan's is in a good position now and is seeing pretty consistent growth. Now is the time to make investments for the business's future success rather than waiting until earnings start slowing down and the business doesn't bring in much new cash. I hope and believe that management knows this and will find some way to smartly invest the company's cash back into the business. Going forward, this is what I would most like to see.

Anyway, this was a good quarter, it's definitely satisfactory to me. I continue to believe in Nathan's and I think the stock is still undervalued by a pretty decent amount. Still no analysts are following the stock, Wall Street still doesn't know about this quality business. I'd be surprised if the company doesn't get a little more attention from Wall Street over the next year or so. But as long as the business is reporting quality results, I honestly don't care. If Wall Street wants to pass on this, so be it.


David K