Critical Analysis: Nathan’s Famous (NATH) and The Competition

Nathan’s Famous (NASDAQ:NATH) is one of 382 public companies in the “Hotels, Restaurants & Leisure” industry, but how does it compare to its rivals? We will compare Nathan’s Famous to related businesses based on the strength of its risk, dividends, analyst recommendations, profitability, institutional ownership, valuation and earnings.

Dividends

Nathan’s Famous pays an annual dividend of $2.00 per share and has a dividend yield of 2.0%. Nathan’s Famous pays out 41.4% of its earnings in the form of a dividend. As a group, “Hotels, Restaurants & Leisure” companies pay a dividend yield of 3.2% and pay out 38.8% of their earnings in the form of a dividend. Nathan’s Famous lags its rivals as a dividend stock, given its lower dividend yield and higher payout ratio.

Institutional and Insider Ownership

66.5% of Nathan’s Famous shares are held by institutional investors. Comparatively, 48.7% of shares of all “Hotels, Restaurants & Leisure” companies are held by institutional investors. 30.7% of Nathan’s Famous shares are held by insiders. Comparatively, 22.1% of shares of all “Hotels, Restaurants & Leisure” companies are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Nathan’s Famous and its rivals’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Nathan’s Famous	11.78%	-187.25%	34.31%
Nathan’s Famous Competitors	8.57%	-41.62%	2.16%

Analyst Ratings

This is a summary of current recommendations for Nathan’s Famous and its rivals, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Nathan’s Famous	0	0	1	0	3.00
Nathan’s Famous Competitors	3819	17310	25634	908	2.50

As a group, “Hotels, Restaurants & Leisure” companies have a potential upside of 58.31%. Given Nathan’s Famous’ rivals higher possible upside, analysts clearly believe Nathan’s Famous has less favorable growth aspects than its rivals.

Earnings and Valuation

This table compares Nathan’s Famous and its rivals gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Nathan’s Famous	$162.06 million	$20.02 million	21.13
Nathan’s Famous Competitors	$3.43 billion	$250.18 million	-158.74

Nathan’s Famous’ rivals have higher revenue and earnings than Nathan’s Famous. Nathan’s Famous is trading at a higher price-to-earnings ratio than its rivals, indicating that it is currently more expensive than other companies in its industry.

Risk & Volatility

Nathan’s Famous has a beta of 0.25, meaning that its share price is 75% less volatile than the S&P 500. Comparatively, Nathan’s Famous’ rivals have a beta of 1.68, meaning that their average share price is 68% more volatile than the S&P 500.

Summary

Nathan’s Famous rivals beat Nathan’s Famous on 8 of the 15 factors compared.

About Nathan’s Famous

Nathan’s Famous is a restaurant and branded-food company best known for its hot dogs. Founded by Nathan Handwerker in Coney Island, New York, in 1916, the company has built its brand around the original Coney Island restaurant and its hot dogs. The company operates and franchises restaurants, while also licensing the Nathan’s Famous name for products sold through grocery retailers and foodservice distributors. Its offerings include hot dogs and other prepared foods, along with restaurant items such as fries and burgers.