Tandy Leather Factory (TLF) AI Stock Analysis

• Market Cap: $24.77M
• Dividend Yield: N/A
• Average Volume (3M): 12.55K
• Price to Earnings (P/E): 2.0
• Beta (1Y): 0.36
• Revenue Growth: -0.28%
• EPS Growth: 363.27%
• Country: US
• Employees: 414
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Specialty Retail
• EPS (TTM): -0.12
• Shares Outstanding: 8,072,875
• 10 Day Avg. Volume: 9,780
• 30 Day Avg. Volume: 12,547
• PEG Ratio: <0.01
• Price to Book (P/B): 0.43
• Price to Sales (P/S): 0.30
• P/FCF Ratio: -2.79
• Enterprise Value/Market Cap: 1.22
• Enterprise Value/Revenue: 0.40
• Enterprise Value/Gross Profit: 0.69
• Enterprise Value/Ebitda: 1.64
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 60 Neutral
• Price Target: $3.00 ▲(5.63% Upside)
• Action: Reiterated Date: 02/25/26
• Date: Action: Reiterated 02/25/26

The score is held back most by weakening financial quality in 2025—negative operating profit, negative free cash flow, and higher leverage—despite strong gross margins. Offsetting this, technicals are mildly constructive with the stock trading above major moving averages, and valuation looks attractive due to a very low P/E.

Positive Factors

High Gross Margins

Sustained gross margins near the high-50% range indicate durable product pricing power and favorable unit economics for leather goods. That margin buffer supports profitability through cost pressure, funds reinvestment in channels, and helps preserve cash generation potential over the next several quarters.

Diversified Revenue Model

Multiple revenue channels — retail stores, e-commerce, wholesale and workshops — reduce dependency on any single demand source. This multichannel mix supports more stable top-line exposure, customer acquisition via education, and recurring touchpoints that bolster mid-term revenue resilience and lifetime value.

Meaningful Equity Cushion

A meaningful equity base provides capital flexibility to absorb losses or invest while management addresses operating weaknesses. Sizeable equity improves borrowing capacity and supports financing options over a multi-quarter horizon, lowering immediate solvency risk despite cyclical pressures.

Negative Factors

Negative Free Cash Flow

Deeply negative free cash flow signals the business is consuming cash from operations or heavy investment, reducing runway for strategic initiatives. Persistently negative FCF constrains capital allocation, increases reliance on external funding, and raises execution risk if operating results don’t recover.

Rising Leverage

Sharply higher leverage weakens financial flexibility and raises fixed obligations. With debt doubled relative to prior norms, the company faces greater interest and refinancing risk, which can magnify distress if operating cash flow remains weak or if macro conditions tighten credit access.

Weak Operating Profit / Earnings Quality

Negative operating profit indicates core operations failed to generate positive operating earnings, while a positive net margin suggests non-operating items may have distorted reported results. This disparity raises concerns about the sustainability of reported earnings and core cash generation going forward.

Tandy Leather Factory Business Overview & Revenue Model

Company Description

Tandy Leather Factory, Inc., together with its subsidiaries, operates as a retailer of leather and leathercraft-related items in North America and Spain. It offers leather, hand tools, hardware, kits, liquids, teaching materials, open workbenches, machinery, and related accessories and supplies. The company also manufactures leather laces, cut leather pieces, do-it-yourself kits, thread laces, belt strips and straps, and Craftaids. In addition, it offers production services, including cutting, splitting, and assembly services to business customers. The company sells its products under the Tandy Leather, Eco-Flo, Craftool, CraftoolPro, Dr. Jackson's, and TandyPro brand names through company-owned stores; and orders generated from its websites, such as tandyleather.com, tandyleather.ca, tandyleather.eu, and tandyleather.com.au. It operates 106 retail stores, including 95 stores in the United States; ten stores in Canada; and one store in Spain. The company was formerly known as The Leather Factory, Inc. and changed its name to Tandy Leather Factory, Inc. in 2005. Tandy Leather Factory, Inc. was founded in 1919 and is headquartered in Fort Worth, Texas.

How the Company Makes Money

Tandy Leather Factory generates revenue primarily through the sale of leather and leatherworking supplies, including hides, tools, dyes, and hardware, both in retail locations and online. The company has a diversified revenue model that includes direct sales to consumers, wholesale distribution to businesses, and educational workshops that promote leather crafting skills. Key revenue streams include in-store purchases, e-commerce sales, and bulk orders from commercial customers. TLF also benefits from partnerships with leathercraft influencers and educators, which help drive brand awareness and customer engagement, further contributing to its earnings.

Tandy Leather Factory Financial Statement Overview

Summary

Gross margin remains strong (~56–59%), but 2025 shows pressured fundamentals: negative operating profit, slightly negative operating cash flow, and deeply negative free cash flow (~-$8.1M). Rising leverage (debt-to-equity ~0.52) alongside weaker cash generation increases near-term financial risk, and the gap between net income/ROE and weak operating results raises earnings-quality concerns.

Income Statement

Revenue has been broadly flat-to-down over 2022–2024, followed by a modest rebound in 2025 (+2.4%). Gross margin has stayed strong and stable (~56–59%), indicating solid pricing/product economics. However, operating profitability has weakened materially: 2025 shows negative operating profit (EBIT/EBITDA below zero) despite a high reported net margin (~11.9%), which raises questions about earnings quality and sustainability versus core operations.

Balance Sheet

Leverage increased sharply in 2025: debt rose to ~$27.4M and debt-to-equity moved up to ~0.52 from ~0.17–0.20 in prior years, reducing financial flexibility. Equity remains meaningful (~$52.6M) and total assets increased, but the higher debt load heightens risk if operating performance stays soft. Return on equity improved in 2025 (~17%), though it appears out of sync with weak operating profit, suggesting the improvement may not be fully driven by core operations.

Cash Flow

Cash generation deteriorated in 2025, with operating cash flow turning slightly negative (~-$0.6M) and free cash flow deeply negative (~-$8.1M). This is a notable reversal from positive operating and free cash flow in 2021–2024 and implies heavier cash investment and/or weaker working-capital dynamics. The combination of negative free cash flow and rising leverage in 2025 increases funding risk if conditions don’t improve.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Mar 2022
Income Statement
Total Revenue	76.32M	74.39M	76.23M	80.33M	82.66M
Gross Profit	43.54M	41.80M	45.16M	46.50M	47.00M
EBITDA	18.46M	5.36M	9.04M	2.83M	4.66M
Net Income	9.10M	827.00K	3.77M	1.23M	1.35M
Balance Sheet
Total Assets	86.63M	74.92M	72.14M	68.58M	73.08M
Cash, Cash Equivalents and Short-Term Investments	16.09M	13.27M	12.16M	7.97M	10.15M
Total Debt	27.38M	10.77M	9.43M	10.37M	11.66M
Total Liabilities	34.04M	17.77M	15.79M	17.12M	21.58M
Stockholders Equity	52.59M	57.15M	56.35M	51.46M	51.50M
Cash Flow
Free Cash Flow	-8.09M	1.56M	3.96M	519.00K	2.71M
Operating Cash Flow	-556.00K	4.55M	4.54M	1.15M	3.72M
Investing Cash Flow	17.36M	-2.98M	-576.00K	-625.00K	-1.00M
Financing Cash Flow	-14.11M	-1.00K	-26.00K	-2.17M	-2.78M

Tandy Leather Factory Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 2.84
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TLF, the sentiment is Positive. The current price of 2.84 is above the 20-day moving average (MA) of 2.30, above the 50-day MA of 2.17, and above the 200-day MA of 2.28, indicating a bullish trend. The MACD of 0.05 indicates Positive momentum. The RSI at 63.12 is Neutral, neither overbought nor oversold. The STOCH value of -302.91 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TLF.

Tandy Leather Factory Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
TLF	60 Neutral	$24.77M	2.01	20.64%	―	-0.28%	363.27%
NHTC	51 Neutral	$28.22M	-43.29	-0.38%	25.20%	-5.07%	-115.50%
MOGU	49 Neutral	$19.16M	16.10	-11.43%	―	-12.53%	-3.24%
TBHC	44 Neutral	$24.26M	-1.03	―	―	-10.64%	37.38%
YJ	44 Neutral	$6.65M	-0.39	―	―	-35.95%	26.08%