National Presto: Two Highly Cash Generative Businesses With A Clean Balance Sheet And 4.7% Div Yield At A Discount

| About: National Presto (NPK)
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NPK's Defense business (75% of Company EBITDA) is high margin and diversifying into new markets while remaining nearly sole source on 40mm ammunition to DoD.

The Housewares business has maintained attractive FCF margins through moderate sales headwinds.

The Company recently sold its absorbents (i.e. adult incontinence products) unit for a premium; this was the lowest-margin, most capital-intensive business unit.

NPK has a debt-free balance sheet with material assets (including cash and short-term investments).

National Presto Industries (NYSE:NPK) (or "The Company") operates two very different business segments: Defense (under "National Defense Corporation") and Housewares (under "Presto" brand). On January 3rd, the Company announced the sale of its Absorbent Products unit, which was historically the weakest unit and accounted for a small portion of total revenues, and even smaller portion of total EBITDA. The Company sold for a pretax valuation of greater than 11x EBITDA.

The below presentation outlines the strengths of the pro-forma entity and why the two remaining businesses are undervalued at the Company's 9.1x EV/EBITDA based on the units' respective financial and operation profiles and public comps.

Disclosure: I am/we are long NPK.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.