| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 85.11 | -16 |
| Intrinsic value (DCF) | 82.33 | -19 |
| Graham-Dodd Method | n/a | |
| Graham Formula | 87.18 | -14 |
Nathan's Famous, Inc. (NASDAQ: NATH) is a globally recognized brand in the foodservice industry, specializing in hot dogs, sausages, and other meat products. Founded in 1916 and headquartered in Jericho, New York, the company operates through a hybrid model of company-owned and franchised restaurants, as well as licensing agreements for retail and foodservice distribution. Nathan's Famous products are sold in supermarkets, mass merchandisers, club stores, and foodservice channels, leveraging its strong brand equity. The company also owns the Arthur Treacher's brand, known for fish fillets. With a restaurant system comprising four company-owned units and 239 franchised locations across 18 U.S. states and 12 foreign countries, Nathan's Famous maintains a niche yet scalable presence in the competitive quick-service restaurant (QSR) sector. Its diversified revenue streams—spanning franchising, licensing, and direct sales—position it as a resilient player in the consumer cyclical sector.
Nathan's Famous presents a compelling investment case due to its strong brand recognition, asset-light franchising model, and diversified revenue streams. The company's low beta (0.306) suggests lower volatility relative to the market, appealing to risk-averse investors. With a market cap of ~$414M, diluted EPS of $4.80, and a dividend yield of ~4.8% (based on a $2/share annual dividend), it offers income potential. However, risks include high reliance on licensing/franchising (subject to royalty fluctuations), limited geographic diversification (only 4 company-owned units), and exposure to commodity price volatility in meat products. The modest revenue ($138.6M) and net income ($19.6M) indicate a small-cap niche player, which may limit growth scalability compared to larger QSR peers.
Nathan's Famous competes in the highly fragmented QSR and packaged meat segments, differentiating itself through iconic brand heritage (since 1916) and a multi-channel distribution strategy. Its competitive advantage lies in licensing agreements that expand its retail footprint without significant capital expenditure (CapEx of just -$313K in FY2024). However, its limited company-owned restaurant presence (only 4 units) reduces direct control over customer experience compared to peers like McDonald's or Shake Shack. The company's franchised and licensed model allows for higher margins (evidenced by $20M operating cash flow) but exposes it to quality control risks. In retail, Nathan's competes with private-label and national brands like Oscar Mayer (KHC) in hot dogs, where its premium positioning justifies pricing power. The Arthur Treacher's brand adds minor diversification but lacks scale in the seafood QSR space. While Nathan's has international franchising (12 countries), its global footprint remains underdeveloped relative to larger chains.