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Alan Brochstein, CFA
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Alan Brochstein, CFA has worked in the securities industry since 1986, primarily with the responsibility for managing investments in institutional environments until he founded AB Analytical Services in 2007 in order to provide independent research and consulting to registered investment... More
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  • Shhhh.... National Presto Reported Good Numbers 0 comments
    Jul 31, 2010 8:28 PM | about stocks: NPK
    This is a repost:  http://ab.typepad.com/my_own_analyst/2010/07/shhhh-national-presto-reported-good-numbers.html



    I am not so sure why they are so secretive, but NPK posted their Q2 EPS on their website and throughout the Wisconsin local media (but no national news release).  You can't even find this on Yahoo...
     
     
    No SEC filing yet, so this is all I have.
     
    Sales grew about 14%, but the bulk of it was defense, with Housewares slowing to 6%.  Recall that Housewares were very strong last quarter, while Defense was very weak (it's lumpy).  EPS grew about 12%, though it appears that used equipment sales in the diapers boosted the earnings. If I look at YTD growth in the segments, here is how it looks compared to 5.9% overall YTD growth:
     
    Absorbent: 5.6%
    Defense: 3.3%
    Houseware: 12.8%
     
    YTD EPS growth off of this 5.9% top-line is 16%.
     
    This sounds decent to me.  I was a bit alarmed at the clearly unsustainable Housewares growth reported last quarter and the not-so-clearly unsustainable weakness in defense, so it's good to see the normalization. 
     
    Compared to 2008, EPS are 78% higher, while sales are 19% higher. We have been looking for minimal margin expansion this year due to a reversion of freight and material costs, which were very weak in 2009. 
     
    It seems that NPK is capable of growing EPS this year slightly faster than sales.  In 2009, EPS were 9.13, and it seems reasonable to continue to expect EPS of about $10 in 2010.  This will require earning about $6 in H2 compared to $5.60 last year (just 7% growth).
     
    A wildcard on NPK is that if the tax-law on dividends is going to change, they could declare their extra dividend in December rather than March.  I am not sure if they would be able to do this or not, but they might even issue some debt to recapitalize and pay an even larger dividend (any tax guys know if this is even possible???).
     
    At 10PE, NPK stock looks to be a reasonable name for conservative growth.


    Disclosure: Long in Model Portfolio (Invest By Model's Conservative Growth/Balanced Model Portfolio)

    Disclosure: Long in Invest By Model's Conservative Growth/Balanced Model Portfolio
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