Is hot dog purveyor Nathan's Famous (NASDAQ:NATH) giving off the aroma of a value investment?

It sure was last November, when fellow Foolish contributor Tim Beyers examined strong second-quarter results. He saw a $6.40 stock that, after running the numbers, was 25% undervalued. That was a good tip, folks. The stock now stands 45.5% higher, trading at $9.31 a share this morning.

Nathan's fourth-quarter and year-end results are just as robust as the ones Tim studied. In the latest quarter, revenue increased a pleasing 22.5%, and net income from continuing operations was up a downright yummy 116.7% compared to the year-ago quarter.

For the entire fiscal year (which ended March 27), revenue increased 14.6%. Net income from continuing operations soared 40.7%, making this the most successful year since the company went public in 1993.

Shareholders at Nathan's have been waiting a long time for this success. This dishpan-shaped stock chart displays lean years between 1993 and mid-2003. Even with the stock trading close to its 52-week high, Nathan's is still more than 20% below its all-time high.

There are 355 franchised Nathan's Famous, Kenny Rogers Roasters, and Miami Sub restaurants -- an increase of 28 during the last fiscal year -- and six company-owned Nathan's Famous restaurants in the New York metropolitan area. The company can also sell Arthur Treacher's Fish & Chips products in co-branded establishments.

But the real fuel for this year's growth was the 41% increase in hot dog sales to the food-service industry. That business now accounts for 31.7% of Nathan's total sales. The numbers are great, but future growth will be far more tepid -- food and beverage companies just aren't in the habit of producing 41% earnings growth.

Is there still the aroma of a value stock here? Not really.

The company's earnings announcement conspicuously lacked earnings guidance for the coming fiscal year and a balance sheet. However, Nathan's did have a rock-solid balance sheet in December, sporting enough cash to cover its long-term debt obligations several times over.

This observer is concerned by the company's operating margins. For the year, they were 8.1% -- way below the 18.5% at McDonald's (NYSE:MCD) and 12.3% at Yum! Brands (NYSE:YUM). It's unfair to compare Nathan's to massive-scale franchised restaurants, but it does show that Nathan's margins are not oversized. (They do exceed the industry average of 5.5%.)

Nathan's is selling for 21 times diluted trailing earnings. I believe it's fully priced for a small chain that has made a big splash recently in the food-service industry. Going forward, I expect earnings growth will fall back.

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Fool contributor W.D. Crotty owns shares of Yum Brands! and McDonald's -- and enjoys dining at Nathan's when in New York. The Fool has a disclosure policy.