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National Presto: Deep Fryers And Grenades


  • National Presto, at first glance, looks like a stereotypical low-end kitchen appliance manufacturer.
  • The vast majority of cash flow and EBITDA is generated from its Defense segment, particularly the sole supplier contract on 40mm rounds.
  • The Defense sector is red hot right now; National Presto is not. Sum-of-the-parts suggests significant upside.

Potential investors visiting the website of National Presto (NYSE:NPK) would be forgiven if they came to the conclusion that they would primarily be investing in pressure cookers and air fryers, but the reality is that the company generates much of its earnings from selling ammo for grenade launchers. Like most structurally odd conglomerates ruled by founding families, the company is not a bastion of shareholder friendliness. Just $6mm worth of shares change hands every day; Maryjo Cohen, CEO since 1994, controls nearly 30% of shares outstanding. Quarterly conference calls or investor presentations? Not happening here. However, the company does throw off gobs of free cash flow and has a history of paying out large special dividends. Is the relative lack of shareholder interest worth the risk?

Business Overview

Normally not a starting point, but it makes sense to start here given the framework. National Presto carries absolutely zero debt. While the firm has a $648mm market cap, $155mm, or nearly 25%, of the market cap is in cash and cash equivalents. Some of this will leave the firm in the form of the regular and special dividends paid out in March ($42mm) after the last quarterly earnings release, but that will all be replaced by year end in the form of free cash flow generation. All in all, this is an extremely low risk small cap.

While grenades and pizzamakers seem like an odd combination in the manufacturing space, the situation was even more wonky: investors in 2016 had to throw adult incontinence products into the mix as well. Thankfully, after the sale of Presto Absorbents early last year for $68mm to Drylock Technologies, National Presto currently breaks down results under two operating segments:

  • Houseware/Small Appliance. Sales are made up of a variety of household electronic products ranging from heat

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This article was written by

Michael Boyd profile picture
Compelling income and growth plays in the energy sector.

Author of Energy Investing Authority

Top 1% Analyst According to TipRanks

I have a decade of experience in both the investment advisory and investment banking spaces, with stints in portfolio management, residential mortgage-backed securities, derivatives, and internal audit at various firms. Today, I am a full-time investor and "independent analyst for hire" here on Seeking Alpha.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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