$29.20
$90.50
bear $29.20
base $74.14
bull $90.50
margin of safety $38.00
market price* $149.05
What the business is. National Presto Industries has three segments. Defense (AMTEC, bought in 2001, plus Amron and related units) makes 40mm ammunition, fuzes, medium-caliber cartridge cases and other ordnance for the U.S. Department of Defense and its prime contractors. In 2025 it had $405.9M of the company's $503.5M in sales and earned $58.4M of operating profit. Housewares/Small Appliance sells Presto pressure cookers, griddles, fryers and other appliances to U.S. and Canadian retailers. Its sales were $95.6M, and it lost $9.3M in 2025, mostly because of tariffs on goods shipped from the Orient after January 31, 2025 (most of these products are made by suppliers in China), plus the cost of moving its warehouse to Nettleton, Mississippi and a $2.7M deposit lost when a vendor went bankrupt. Safety (Rely, a carbon-monoxide detector startup) lost $8.9M in 2025, after losses of $10.6M in 2023 and $10.2M in 2024. Earnings history. We measure owner earnings as operating cash flow, with working-capital swings removed, minus stock pay and the capital spending needed to keep the business running. Per share this came to $5.85 (2018), $6.02, $6.66, $4.76, $3.81, $5.44, $5.09 and $3.38 (2025). Write-offs of a note receivable in 2021, impairments in 2022 and the 2025 vendor deposit are non-cash and are added back. In 2024 and 2025 reported operating cash flow was negative because inventory rose by $117M to build Defense work in progress for the contract backlog. We treat that as working capital that should come back as the backlog ships, not as lost earnings. The 2025 figure is held down by $27.0M of capital spending. $23.2M of that was in Housewares and included buying the 507,000 sq ft Nettleton distribution center. The old Canton warehouse was sold on February 10, 2026, and the Jackson warehouse is to be sold too. Before 2024 the company held a large portfolio of securities, and the interest on it ($2-7M a year before tax) is part of those earnings. Those funds are now tied up in inventory, so we take that interest income out and value only the operating business. On that basis the starting level is the 2018-2025 median of about $4.55 per share, or roughly $32.5M a year. The window starts after the Absorbent Products business was sold on January 3, 2017. It covers a full Defense contract cycle: the end of the second 40mm contract in 2018, the 2021-2022 trough and the 2023-2025 ramp. What is contracted. The Defense backlog was $1,748M at December 31, 2025, up from $1,086M a year earlier and $564M two years earlier. Management expects it to ship over 18 to 42 months. That is at least about $500M of Defense sales a year through mid-2029. It rests on the Army's fourth five-year 40mm systems contract, under which AMTEC is the sole prime. Awards under that contract total $965M for FY22-FY25, deliveries run to 2030, and the FY26 award year remains, up to a $1,413M ceiling. It also rests on a 2024 contract for the M918E2 day/night/thermal training cartridge: $256M awarded so far, delivered 2025-2027, with an $818.9M ceiling. AMTEC has been a prime contractor on every Army 40mm systems award since 2005. The risks are also in the filings. Almost all Defense work is fixed-price, and the escalation clauses cover only steel, aluminum and zinc. Defense gross margin has fallen from 27-28% in 2019-2020 to 19% in 2025. The government can terminate contracts for convenience. Near-term path. In 2025 owner earnings per share fell 34%, and the cash flow we value fell 29% to about $22.9M. The base case assumes about $40M in the first year. We accept a rebound that large because of dated facts in the filings. Capital spending in the first half of 2026 was $5.4M, against $25.4M a year earlier, now that the warehouse purchase is done. Operating cash flow in the first half of 2026 was $44.1M, against $1.5M. The contracted backlog is shipping, and first-half sales rose to $265.2M from $224.1M. One caution: only the second quarter was strong. First-quarter 2026 pre-tax profit was $8.6M, below the $9.8M of a year earlier. So we do not raise the long-run level, and the gain is credited only for the backlog years. Base case ($74.14 per share). Defense ships the backlog at about the 2025 margin. Housewares stays weighed down by tariffs, with no recovery credited, and Safety keeps losing money. That gives cash flow of about $40-42M a year until mid-2029. Then Defense volume falls back to the long-run level of $32.5M a year. As it does, about $50M of the inventory built up in 2024-2025 turns back into cash: inventory was $327M at July 5, 2026, against $152M at the end of 2022, and a smaller release ($26M) happened in 2018 when deliveries under the second 40mm contract ended. The $32.5M level is held for 25 years, based on AMTEC's 20-year record of winning recompetes and the long-established Presto brand. It then fades to zero over the next ten years. The business is worth about $530M. It owes about nothing: the $23.6M credit-line balance at year-end 2025 was fully repaid by July 5, 2026. The $15.8M of cash on hand is treated as needed for operations, since the company was borrowing for working capital only six months earlier. Bear case ($29.20). The backlog ships but fixed-price cost pressure cuts Defense margins to about 11%, Housewares keeps losing money under tariffs, and Safety losses continue, for about $26-30M a year to mid-2029. Then Defense falls back to its 2019-2023 sales level of about $200-240M, and cash flow drops to about $13M a year. About $60M of inventory comes back as cash over two years. The 40mm franchise is lost at a later recompete, and earnings fade to zero by year 20. Business value is about $209M, with no net debt. Bull case ($90.50). Defense volume stays close to backlog levels through the remaining FY26 award year and the M918E2 ceiling, and margins return to the 2024 level. Housewares gets back to its 2023-2024 profits ($7-13M of operating profit) as price increases make up for tariffs. Cash flow is about $48-55M a year to 2029, then $48M to year 10, then $40M to year 30, then fades out. Business value is about $647M, with no net debt. We give no credit for new products, for Safety turning profitable, or for any Defense awards beyond the stated ceilings. Testing the case. The base case depends most on the drop after the backlog. The filings support timing it around 2029: 40mm deliveries under the current contract run to 2030 and M918E2 deliveries to 2027, so we did not move it earlier. The other weak point is Defense margins. Margins have fallen every year since 2023, and that trend is the reason the bear case uses lower margins. Since our previous analysis. That analysis showed $9.15 / $69.43 / $143.76. The bear case is higher now. The credit line has been repaid, operating cash flow has turned clearly positive in 2026, and the 2025 spending turned out to be a one-time warehouse replacement rather than ongoing cost. The bull case is lower now. It no longer assumes growth that is not under contract, and every case is discounted at the same 6%. The base case is about the same. Margin-of-safety price. The range from bear to base is wide, because most of the value depends on Army ammunition contracts. At $38 the shares would trade at about 8 times the $4.55 starting level of owner earnings, with the backlog years and the inventory release on top. If the shares reach about 85% of base-case value within three years, the base case implies about a 20% annual return including the $1.00 regular dividend. The extra dividend ($3.50 in 2024) was not paid in 2025. The credit line was due to expire September 30, 2026; whether it was renewed is not yet in the filings.