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Tandy Leather Factory (TLF)
NASDAQ:TLF
US Market

Tandy Leather Factory (TLF) AI Stock Analysis

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Tandy Leather Factory

(NASDAQ:TLF)

Rating:73Outperform
Price Target:
$3.50
▲(8.36%Upside)
The overall stock score for Tandy Leather Factory is driven by a strong valuation, suggesting potential undervaluation, and positive technical indicators showing upward momentum. However, moderate financial performance with declining margins and revenue presents potential risks regarding profitability and growth.

Tandy Leather Factory (TLF) vs. SPDR S&P 500 ETF (SPY)

Tandy Leather Factory Business Overview & Revenue Model

Company DescriptionTandy 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 MoneyTandy Leather Factory generates revenue primarily through the sale of leather and leathercraft supplies. Its key revenue streams include retail sales from its physical store locations and online e-commerce platform, as well as wholesale distribution to businesses and institutions. The company benefits from its strong brand recognition and customer loyalty in the niche market of leathercrafting. Partnerships with educational institutions and craft-focused organizations also contribute to its revenue by fostering long-term customer relationships and expanding its market reach.

Tandy Leather Factory Earnings Call Summary

Earnings Call Date:May 12, 2025
(Q4-2023)
|
% Change Since: 13.33%|
Next Earnings Date:Aug 19, 2025
Earnings Call Sentiment Neutral
The earnings call presented a balanced view with significant improvements in operating income, adjusted EBITDA, and gross margin, coupled with strategic new store openings. However, these positives were offset by a decline in overall sales and lower-than-expected interest income. The company showed strong financial discipline and strategic planning, suggesting cautious optimism for future growth.
Q4-2023 Updates
Positive Updates
Increase in Operating Income
Operating income rose to $4.4 million, marking a $3 million increase over the previous year.
Adjusted EBITDA Growth
Adjusted EBITDA reached $6.5 million, up $2.5 million from the previous year.
Improved Gross Margin
Gross margin improved by 130 basis points due to reductions in freight and warehouse overhead, resulting in a decline in operating expenses by 9.7%.
Strong Balance Sheet
Cash increased by over $4 million to $12.2 million, and the company continues to have no debt.
New Store Openings
Opened a new store in Queens, New York, with leases signed for two more stores in Margate, Florida, and Richmond, Virginia.
Positive Interest in Property Sale
Strong interest reported in the potential sale of the Fort Worth property, which could release excess cash.
Negative Updates
Decline in Sales
Sales decreased by 5.1% to $76.2 million, attributed to weak consumer demand and store closures.
Low Interest Income
Interest income on cash was low at about $90,000, despite an average cash balance close to $10 million.
Company Guidance
In the Tandy Leather Factory (TLF) Q4 2023 earnings call, the company provided guidance focused on maintaining profitability and cash flow amid a challenging market environment. For the year, TLF reported a 5.1% decline in sales totaling $76.2 million, yet achieved a $4.4 million operating income, up $3 million from the previous year. Gross margin improved by 130 basis points, while operating expenses dropped by 9.7%. Adjusted EBITDA rose to $6.5 million, a $2.5 million increase year-over-year. The company ended the year with $12.2 million in cash, a $4 million increase, and maintained a debt-free balance sheet. Looking to 2024, Tandy plans to open 3 to 5 new stores, leveraging a new retail model that focuses on a smaller footprint and expert customer service. Additionally, the company is exploring the sale of its Fort Worth property to potentially unlock more value and excess cash, which could be returned to shareholders.

Tandy Leather Factory Financial Statement Overview

Summary
Tandy Leather Factory demonstrates moderate financial health with strong equity and low leverage. However, decreasing margins and revenue suggest challenges in profitability and growth, though cash flow remains relatively stable.
Income Statement
65
Positive
Tandy Leather Factory shows moderate stability with a gross profit margin of 56.2% and a declining net profit margin to 1.1% in 2024, down from 4.9% in 2023. Revenue has decreased by 2.4% from 2023 to 2024, indicating potential market challenges. The EBIT margin has also dropped significantly from 5.8% to 0.8%, highlighting decreased operational efficiency.
Balance Sheet
72
Positive
The company's balance sheet is relatively strong with a debt-to-equity ratio of 0.19, indicating low leverage. The equity ratio is 76.3%, reflecting a strong equity position. ROE decreased from 6.7% in 2023 to 1.4% in 2024, showing reduced profitability on equity.
Cash Flow
68
Positive
Operating cash flow remained stable from 2023 to 2024, but the free cash flow decreased by 60.5%, showing reduced efficiency in cash generation. The operating cash flow to net income ratio is 5.5, indicating strong cash conversion, while the free cash flow to net income ratio is 1.9, reflecting a decent level of cash available after investments.
Breakdown
Dec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
74.39M76.23M80.33M82.66M64.08M
Gross Profit
41.80M45.16M46.50M47.00M36.06M
EBIT
628.00K4.41M1.39M2.30M-5.27M
EBITDA
628.00K9.04M5.82M6.52M-2.06M
Net Income Common Stockholders
827.00K3.77M1.23M1.35M-4.90M
Balance SheetCash, Cash Equivalents and Short-Term Investments
13.27M12.16M7.97M10.15M10.33M
Total Assets
74.92M72.14M68.58M73.08M75.69M
Total Debt
10.77M9.43M10.37M11.66M13.26M
Net Debt
-2.50M-2.73M2.39M1.51M2.94M
Total Liabilities
17.77M15.79M17.12M21.58M23.50M
Stockholders Equity
57.15M56.35M51.46M51.50M52.19M
Cash FlowFree Cash Flow
1.56M3.96M519.00K2.71M-13.84M
Operating Cash Flow
4.55M4.54M1.15M3.72M-12.53M
Investing Cash Flow
-2.98M-576.00K-625.00K-1.00M6.26M
Financing Cash Flow
-1.00K-26.00K-2.17M-2.78M416.00K

Tandy Leather Factory Technical Analysis

Technical Analysis Sentiment
Positive
Last Price3.23
Price Trends
50DMA
2.91
Positive
100DMA
3.12
Positive
200DMA
3.12
Positive
Market Momentum
MACD
0.08
Negative
RSI
61.45
Neutral
STOCH
41.30
Neutral
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 3.23 is above the 20-day moving average (MA) of 3.02, above the 50-day MA of 2.91, and above the 200-day MA of 3.12, indicating a bullish trend. The MACD of 0.08 indicates Negative momentum. The RSI at 61.45 is Neutral, neither overbought nor oversold. The STOCH value of 41.30 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TLF.

Tandy Leather Factory Risk Analysis

Tandy Leather Factory disclosed 21 risk factors in its most recent earnings report. Tandy Leather Factory reported the most risks in the "Macro & Political" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Tandy Leather Factory Peers Comparison

Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
TLTLF
73
Outperform
$27.45M2.1422.74%-1.32%252.38%
63
Neutral
$6.96B11.512.80%3.85%2.70%-24.43%
52
Neutral
$29.48M-39.57%36.82%-8.85%-397.36%
51
Neutral
$54.34M107.031.44%17.36%-0.62%1.15%
YJYJ
49
Neutral
$8.87M-10.86%-35.95%26.08%
46
Neutral
$29.65M77.02%-5.83%18.04%
40
Underperform
$15.42M-8.25%-32.31%69.20%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TLF
Tandy Leather Factory
3.23
-0.02
-0.62%
BGFV
Big 5 Sporting Goods
1.29
-1.85
-58.92%
KIRK
Kirkland's
1.25
-0.68
-35.23%
NHTC
Natural Health Trends
4.77
-1.25
-20.76%
MOGU
Mogu
2.12
-0.28
-11.67%
YJ
Yunji
1.77
-1.15
-39.38%

Tandy Leather Factory Corporate Events

DividendsBusiness Operations and Strategy
Tandy Leather Factory Announces New Lease and Dividend
Positive
Jan 30, 2025

On January 28, 2025, Tandy Leather Factory entered into a commercial lease agreement for new corporate headquarters and a distribution center in Benbrook, Texas, expected to commence in July 2025. The company announced a special dividend and completed the sale of its current headquarters, planning to move operations by September 2025. These strategic moves aim to optimize operations and return value to shareholders, while maintaining its leadership in the leathercraft industry.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.