National Presto Rallies 30% in 6 Months: Should You Buy the Stock?

National Presto Industries, Inc. NPK shares have gained 29.6% in the past six months compared with the industry’s 8% growth. The company has outperformed other industry players, including Swire Pacific Limited SWRAY and Honeywell International Inc. HON. Shares of SWRAY and HON have gained 17.1% and 10.8%, respectively, in the same time frame. Strong defense contract wins, a $1.4 billion backlog, strategic facility investments, and solid liquidity provide powerful tailwinds driving National Presto’s growth and stability.

A Key Look Into NPK’s Business Operations

National Presto operates through three distinct segments: Housewares/Small Appliance, Defense, and Safety. The Housewares segment focuses on the design, marketing, and distribution of household appliances, offering a wide range of products aimed at improving convenience and lifestyle. The Defense segment manufactures munitions and related products primarily for government use, supported by various specialized subsidiaries. This segment operates under long-term government contracts and adheres to strict regulatory standards. The Safety segment includes early-stage companies developing innovative monitoring and alert systems, as well as residential safety devices. The company emphasizes product innovation across all segments, though new product development entails inherent risks.

National Presto’s Key Tailwinds

National Presto is experiencing significant growth in its Defense segment, driven by recent major government awards. These include a $139.3 million order for 40mm M918E2 cartridges from the U.S. Army and a $92.3 million subcontract with Boeing for warhead production under the Small Diameter Bomb program. Additionally, the company secured a five-year IDIQ contract valued up to $49 million for engineering services in support of 40mm grenade ammunition. These contracts are expected to boost revenues starting in 2026 and extend well into the next decade, strengthening the company's long-term outlook.

The company continues to enhance its production infrastructure, particularly within its Defense division. In the first nine months of 2025, it invested over $22 million in capital expenditures, including $1.3 million allocated to Defense operations. These improvements support growing manufacturing demands and increase efficiency. With strategic facilities spread across multiple U.S. states, including Wisconsin, Arkansas and Texas, the company maintains flexible and scalable operations capable of delivering a wide range of defense-related products, from ordnance components to metal parts and fuses.

As of Sept. 28, 2025, National Presto reported a Defense segment backlog of $1.4 billion, an increase from $1.1 billion at year-end 2024. This backlog provides the company with high visibility into future revenue streams and reflects the strong demand for its military-grade products. Most contracts are long-term and fixed-price, offering stability amid changing market dynamics. This solid pipeline, supported by strategic relationships with the U.S. Department of Defense and prime contractors, ensures sustained utilization of production capacity in the years ahead.

The company’s financial position remains sound, enabling it to fund growth initiatives and maintain operational flexibility. With a current ratio of 3.5:1 as of Q3 2025, and continued access to a $50 million unsecured credit facility, National Presto has ample liquidity to meet its capital needs. Financing activities during the first nine months of 2025 yielded nearly $30 million, helping offset increased investments in inventory and infrastructure. Combined with disciplined cost control and no reliance on risky financial instruments, the company is well-prepared to pursue future opportunities and manage evolving market conditions.

Challenges Persist for NPK’s Business

NPK continues to experience several challenges. The Housewares/Small Appliances segment saw a decline in sales volume, and its profitability was further reduced by tariffs imposed under the Trump administration, which increased costs that could not be offset due to LIFO accounting. A $2.7 million loss was also recorded in the first nine months of 2025 due to an unrecoverable vendor deposit following a supplier bankruptcy. Operating costs rose, driven by higher legal, professional, and personnel expenses. The Safety segment, still in early-stage development, continued to post negative margins due to limited revenues. Additionally, increased borrowing to fund inventory led to higher interest expenses, reducing overall earnings.

National Presto’s Valuation

The company is cheaply priced compared with the industry average. Currently, NPK is trading at 1.94X trailing 12-month EV/sales value, below the industry’s average of 2.68X. The metric also remains lower than the company’s peers, Swire Pacific (4.17X), and Honeywell International (4.13X).

Conclusion

Given National Presto’s robust Defense segment growth backed by long-term government contracts and a $1.4 billion backlog, the company is well-positioned for sustained revenue expansion and operational strength through the next decade. Despite headwinds in the consumer and Safety divisions — such as declining appliance sales, ongoing losses, and elevated operating costs — the company’s strong financial footing and defense-driven momentum offer a promising growth trajectory for the future. 

Strong fundamentals, coupled with NPK’s undervaluation, present a lucrative opportunity for investors to add the stock to their portfolio. 

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This article originally published on Zacks Investment Research (zacks.com).

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