Napco Security Technologies (NSSC) AI Stock Analysis

• Market Cap: $1.06B
• Dividend Yield: 1.73%
• Average Volume (3M): 268.90K
• Price to Earnings (P/E): 24.9
• Beta (1Y): 1.49
• Revenue Growth: -1.05%
• EPS Growth: -2.78%
• Country: US
• Employees: 1,070
• Sector: Industrials
• Sector Strength: 94
• Industry: Security & Protection Services
• EPS (TTM): 0.28
• Shares Outstanding: 35,656,420
• 10 Day Avg. Volume: 252,896
• 30 Day Avg. Volume: 268,905
• PEG Ratio: -4.02
• Price to Book (P/B): 6.84
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 21.46
• Enterprise Value/Market Cap: 0.97
• Enterprise Value/Revenue: 1.37
• Enterprise Value/Gross Profit: 10.02
• Enterprise Value/Ebitda: 4.77
• 1Y Price Target: $30.08
• Price Target Upside: 1.28% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6

• Rating: 79 Outperform
• Price Target: $32.00 ▲(7.74%Upside)

Napco Security Technologies scores well due to its strong financial performance, highlighted by robust profitability and cash flow. Technical analysis shows short-term strength, though longer-term trends are uncertain. The valuation is fair, complementing stable dividend yields. The latest earnings call underscores growth in recurring revenues and strategic advantages but also flags concerns with declining net sales and rising expenses.

Positive Factors

Competitive Advantage

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

Market Position

NAPCO remains well-positioned to capitalize on favorable secular trends throughout commercial security.

Service Revenue Growth

NAPCO's business model has fundamentally shifted, with recurring service revenue now approaching 50% of sales, driving margin expansion.

Negative Factors

Demand Concerns

Continued sluggish demand in both the commercial security and door-locking device business.

Distributor Challenges

Equipment sales struggled due in particular to a $5.1 million combined downdraft at three of NAPCO's largest distributors.

Macro Uncertainty

Visibility remains weak, both from a macro perspective and as it relates to several key distributors.

Napco Security Technologies Business Overview & Revenue Model

Company Description

Napco Security Technologies, Inc. is a leading manufacturer and provider of high-tech security solutions, primarily serving the security, school, business, and government sectors. The company offers a wide range of products including intrusion and fire alarms, access control systems, and video surveillance solutions. Napco is renowned for its innovation in security technology, providing integrated solutions that meet the diverse needs of its clients.

How the Company Makes Money

Napco Security Technologies generates revenue primarily through the sale of its security products, which include intrusion alarms, fire alarms, access control systems, and video surveillance equipment. The company's key revenue streams are product sales to distributors, dealers, and integrators who then sell to end-users. Napco's products are also used in various sectors, including residential, commercial, institutional, industrial, and government markets. Additionally, the company benefits from recurring revenue through its service offerings, which include monitoring and support for their security systems. Partnerships with distributors and security system dealers are significant contributors to its earnings, providing a broad market reach and facilitating the sale of its comprehensive security solutions.

Napco Security Technologies Financial Statement Overview

Summary

Napco Security Technologies exhibits robust financial health with strong profitability, minimal leverage, and efficient cash flow conversion. The company's income statement highlights high profit margins, while its balance sheet shows minimal debt and excellent equity utilization. Cash flow metrics indicate strong cash generation, supporting continued financial stability.

Income Statement

The income statement shows healthy profit margins with a Gross Profit Margin of 56.31% and a Net Profit Margin of 25.01% for TTM. Revenue growth slowed slightly in the TTM compared to the previous year, but EBIT and EBITDA margins remain robust at 26.57% and 27.47%, respectively. Overall, the company demonstrates strong profitability and efficient cost management.

Balance Sheet

The balance sheet is strong with a low Debt-to-Equity Ratio of 0.03 and a high Equity Ratio of 84.62%. Return on Equity is impressive at 28.05%, indicating effective use of equity to generate profits. The company's leverage is minimal, enhancing financial stability and reducing risk.

Cash Flow

Cash flow analysis reveals positive trends with a significant Free Cash Flow Growth Rate of 16.05% in the TTM. The Operating Cash Flow to Net Income Ratio is 1.17, indicating strong cash generation relative to net income. The Free Cash Flow to Net Income Ratio is also high at 1.12, reflecting efficient cash flow conversion.

Breakdown	TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement
Total Revenue	181.23M	188.82M	170.00M	143.59M	114.03M	101.36M
Gross Profit	102.08M	101.75M	73.23M	59.16M	50.15M	43.59M
EBITDA	49.81M	55.98M	32.26M	20.00M	19.63M	14.16M
Net Income	45.31M	49.82M	27.13M	19.60M	15.41M	7.79M
Balance Sheet
Total Assets	190.86M	207.75M	166.65M	148.58M	123.29M	105.84M
Cash, Cash Equivalents and Short-Term Investments	89.30M	97.72M	66.75M	46.80M	40.22M	18.25M
Total Debt	5.38M	5.51M	5.69M	7.07M	10.99M	11.02M
Total Liabilities	29.32M	28.86M	26.48M	34.78M	30.06M	27.94M
Stockholders Equity	161.55M	178.89M	140.17M	113.79M	93.24M	77.90M
Cash Flow
Free Cash Flow	50.81M	43.77M	21.74M	6.85M	21.98M	8.69M
Operating Cash Flow	53.24M	45.37M	24.70M	8.33M	22.99M	10.31M
Investing Cash Flow	14.25M	-3.15M	-28.26M	-1.56M	-6.43M	-1.61M
Financing Cash Flow	-49.59M	-12.83M	-2.21M	155.00K	0.00	1.53M

Napco Security Technologies Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 29.70
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NSSC, the sentiment is Positive. The current price of 29.7 is below the 20-day moving average (MA) of 30.23, above the 50-day MA of 28.93, and below the 200-day MA of 30.55, indicating a bullish trend. The MACD of 0.57 indicates Positive momentum. The RSI at 58.32 is Neutral, neither overbought nor oversold. The STOCH value of 35.37 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for NSSC.

Napco Security Technologies Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NSSC	79 Outperform	$1.06B	24.88	27.48%	1.73%	-1.05%	-2.78%
SNT	79 Outperform	$104.27M	65.29	-3.47%	―	―	―
CIX	73 Outperform	$301.80M	16.80	11.35%	13.06%	-9.51%	-26.61%
ARLO	73 Outperform	$1.70B	―	-21.34%	―	0.27%	-18.75%
NL	69 Neutral	$324.35M	5.36	15.93%	5.12%	-6.25%	442.27%
Sector *	65 Neutral	$11.08B	15.70	5.19%	2.15%	3.13%	-24.94%
MG	64 Neutral	$260.35M	17.68	7.70%	―	-2.09%	―

Napco Security Technologies Corporate Events

Napco Security Technologies Appoints New CFO Amidst Financial Updates

On May 2, 2025, NAPCO Security Technologies announced the appointment of Andrew Vuono as Chief Financial Officer, effective May 6, 2025, while he continues as Chief Accounting Officer. The company also declared a cash dividend of $0.14 per share, payable on July 3, 2025. In its fiscal 2025 third quarter results, NAPCO reported a 10.8% decrease in net sales to $44 million, but a 10.6% increase in recurring service revenue to $21.6 million. The gross profit margin improved to 57.2%, though diluted EPS fell to $0.28. The company introduced a new cloud-based MVP Access platform at the International Security Conference in April 2025, expected to generate recurring revenue. Despite challenges from tariffs, NAPCO remains confident in its financial strength and competitive positioning due to its manufacturing locations in the Dominican Republic and USA.