Napco Security Technologies (NSSC) AI Stock Analysis

• Market Cap: $789.55M
• Dividend Yield: 1.61%
• Average Volume (3M): 495.88K
• Price to Earnings (P/E): 16.6
• Beta (1Y): 1.49
• Revenue Growth: 5.14%
• EPS Growth: 12.03%
• Country: US
• Employees: 1,070
• Sector: Industrials
• Sector Strength: 67
• Industry: Security & Protection Services
• EPS (TTM): 1.30
• Shares Outstanding: 36,401,420
• 10 Day Avg. Volume: 613,134
• 30 Day Avg. Volume: 495,882
• PEG Ratio: 1.38
• Price to Book (P/B): N/A
• Price to Sales (P/S): 4.67
• Price to Cash Flow (P/CF): 16.10
• P/FCF Ratio: 17.60
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $27.20
• Price Target Upside: 25.40% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 5

Napco Security Technologies scores strongly in financial performance, demonstrating robust growth and a solid balance sheet. However, technical indicators show bearish momentum, which could signal short-term challenges. Valuation is fair, supported by a reasonable P/E ratio and dividend yield. The mixed earnings call results add a layer of caution, with growth in recurring revenue offset by declines in equipment sales and increased expenses. Overall, the stock is positioned for long-term growth, but current market conditions and operational challenges warrant careful monitoring.

Positive Factors

Market Position

NAPCO has grown or maintained market share among its key distributors and dealers.

Production Advantage

NAPCO manufactures its products in the Dominican Republic, putting it in a better position than competitors that source product from China and Mexico.

Revenue Potential

NSSC's Prima product suite for residential applications and its recent MVPAccess commercial offering could add further to recurring revenues as they ramp over the next two years.

Negative Factors

Economic Outlook

Feedback suggests a significant slowdown had taken place well before the tariff action announcement, indicating increased uncertainty as to the economic outlook.

Financial Performance

NSSC shares sank 27% after the company posted weaker than expected results on sharply lower equipment revenue.

Revenue Visibility

A second consecutive negative surprise in equipment revenues suggests weaker visibility than anticipated.

Napco Security Technologies Business Overview & Revenue Model

Company Description

Napco Security Technologies, Inc. is a leading provider in the security solutions sector, specializing in the design and manufacture of high-tech electronic security systems. The company's core offerings include intrusion and fire alarm systems, access control systems, and video surveillance solutions. Napco serves a diverse range of industries, including commercial, residential, institutional, industrial, and governmental sectors, ensuring comprehensive security solutions tailored to various needs.

How the Company Makes Money

Napco Security Technologies generates revenue primarily through the sale of its security products, which include alarm systems, locking devices, and access control systems. The company also earns money through its recurring revenue services, such as alarm monitoring and subscription-based services, providing ongoing support and updates to its security solutions. Key revenue streams include direct sales to security product distributors, dealers, and installers, as well as partnerships with large-scale integrators and security service providers. Strategic alliances and innovations in security technology also play a significant role in sustaining and enhancing Napco's revenue growth.

Napco Security Technologies Financial Statement Overview

Summary

Napco Security Technologies exhibits strong financial health with robust revenue growth, high profitability margins, and a low debt position, supported by efficient cash flow management. These factors collectively highlight a well-managed company poised for sustainable growth.

Income Statement

Napco Security Technologies has shown strong revenue growth, with a 30% increase from 2022 to 2023 and a consistent upward trajectory in profitability over the years. The TTM (Trailing-Twelve-Months) data indicates healthy profit margins, with a Gross Profit Margin of 55.4% and a Net Profit Margin of 25.9%. The company's EBIT and EBITDA margins are robust at 27.6% and 28.2%, respectively. These figures highlight significant strength in operational efficiency and cost management.

Balance Sheet

The balance sheet of Napco Security Technologies is strong, with a low Debt-to-Equity Ratio of 0.03, indicating minimal financial leverage and risk. The Return on Equity (ROE) has improved significantly, reflecting enhanced profitability relative to shareholders' equity. The Equity Ratio of 86% shows a solid financial foundation, ensuring stability and resilience against potential liabilities.

Cash Flow

The company has demonstrated substantial free cash flow growth, with a notable increase in both operating and free cash flows. The Operating Cash Flow to Net Income Ratio is an impressive 1.08, indicating effective cash generation from operations. The Free Cash Flow to Net Income Ratio is 1.02, reflecting the company's ability to convert earnings into cash efficiently, which bodes well for future investments and shareholder returns.

Breakdown
TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement		Total Revenue
186.53M	188.82M	170.00M	143.59M	114.03M	101.36M
	Gross Profit
103.43M	101.75M	73.23M	59.16M	50.15M	43.59M
	EBIT
51.48M	53.82M	30.32M	18.23M	17.34M	10.81M
	EBITDA
52.57M	55.98M	32.26M	20.00M	19.63M	14.16M
	Net Income Common Stockholders
48.38M	49.82M	27.13M	19.60M	15.41M	7.79M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
5.83M	97.72M	66.75M	46.80M	40.22M	18.25M
	Total Assets
74.50M	207.75M	166.65M	148.58M	123.29M	105.84M
	Total Debt
30.70M	5.51M	5.69M	7.07M	10.99M	11.02M
	Net Debt
24.88M	-59.83M	-30.27M	-34.66M	-23.81M	-7.23M
	Total Liabilities
38.39M	28.86M	26.48M	34.78M	30.06M	27.94M
	Stockholders Equity
36.11M	178.89M	140.17M	113.79M	93.24M	77.90M
Cash Flow		Free Cash Flow
49.47M	43.77M	21.74M	6.85M	21.98M	8.69M
	Operating Cash Flow
52.20M	45.37M	24.70M	8.33M	22.99M	10.31M
	Investing Cash Flow
16.02M	-3.15M	-28.26M	-1.56M	-6.43M	-1.61M
	Financing Cash Flow
-29.51M	-12.83M	-2.21M	155.00K	0.00	1.53M

Napco Security Technologies Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 21.69
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NSSC, the sentiment is Negative. The current price of 21.69 is below the 20-day moving average (MA) of 22.23, below the 50-day MA of 23.82, and below the 200-day MA of 37.30, indicating a bearish trend. The MACD of -0.92 indicates Negative momentum. The RSI at 42.17 is Neutral, neither overbought nor oversold. The STOCH value of 78.91 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NSSC.

Napco Security Technologies Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NSSC	74 Outperform	$789.55M	16.63	29.13%	1.61%	5.14%	12.03%
CIX	73 Outperform	$319.05M	19.23	10.53%	4.63%	-9.51%	-26.61%
NL	68 Neutral	$377.10M	5.61	17.53%	4.27%	-9.52%	―
SNT	66 Neutral	$74.38M	65.29	-3.47%	―	―	―
Sector *	62 Neutral	$4.16B	11.30	5.46%	215.76%	4.12%	-8.55%
MG	62 Neutral	$291.77M	15.43	9.80%	―	3.43%	―
ARLO	61 Neutral	$943.45M	―	-29.88%	―	4.01%	-27.92%

Napco Security Technologies Corporate Events

Napco Security Reports Mixed Q2 Fiscal 2025 Results

For the second quarter of fiscal 2025, NAPCO Security Technologies reported mixed financial results. Net sales decreased by 9.7% year-over-year to $43 million, impacted by reduced sales to major distributors and the timing of custom locking product projects. Despite this, the company saw a 14.4% increase in recurring service revenue to $21.2 million and improved its gross profit margin to 57.0%. The company’s school and classroom security sales continue to grow, highlighted by a contract with the Pasadena Unified School District. NAPCO introduced new products like the Prima All-in-One Panel and the MVP Access platform, expected to enhance market penetration and generate recurring revenue. The company remains optimistic about improving its financial performance in the latter half of fiscal 2025.