Napco Security Technologies (NSSC)
NASDAQ:NSSC
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Napco Security Technologies
(NASDAQ:NSSC)
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Rating:78Outperform
Price Target:
$44.00
▲(2.92% Upside)
Action:ReiteratedDate:02/03/26
Strong overall score driven primarily by high-quality financial performance (strong margins, ROE, cash generation, low leverage) and a positive earnings-call outlook with continued revenue, margin, and free-cash-flow momentum. Offsetting factors are mixed technical signals (negative MACD; price below 100DMA) and a somewhat elevated P/E despite a modest dividend yield.
Positive Factors
High‑margin recurring revenue
A near‑50% revenue mix from subscription-like communications with ~90% gross margins and a rising $99M run‑rate strengthens predictable, high-margin cash flow. This durable recurring stream supports valuation resilience, lowers revenue cyclicality and underpins long-term operating leverage and FCF stability.
Negative Factors
Revenue and cash‑flow variability
Top‑line and cash conversion have swung across years, meaning demand and timing sensitivity remain risks. Even with strong margins, variable revenue can complicate investment planning, forecasting recurring subscriber upgrades, and could pressure margin expansion if volumes weaken or mix shifts toward lower‑margin equipment.
Read all positive and negative factors
Positive Factors
Negative Factors
High‑margin recurring revenue
A near‑50% revenue mix from subscription-like communications with ~90% gross margins and a rising $99M run‑rate strengthens predictable, high-margin cash flow. This durable recurring stream supports valuation resilience, lowers revenue cyclicality and underpins long-term operating leverage and FCF stability.
Read all positive factors
Napco Security Technologies (NSSC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.52B
Dividend Yield1.29%
Average Volume (3M)777.10K
Price to Earnings (P/E)27.5
Beta (1Y)1.49
Revenue Growth-2.28%
EPS Growth-9.94%
CountryUS
Employees1,070
SectorIndustrials
Sector Strength72
IndustrySecurity & Protection Services
Share Statistics
EPS (TTM)0.38
Shares Outstanding35,664,326
10 Day Avg. Volume319,582
30 Day Avg. Volume777,096
Financial Highlights & Ratios
PEG Ratio-2.23
Price to Book (P/B)6.39
Price to Sales (P/S)5.93
P/FCF Ratio20.96
Enterprise Value/Market Cap0.96
Enterprise Value/Revenue7.65
Enterprise Value/Gross Profit13.61
Enterprise Value/Ebitda27.05
Forecast
1Y Price Target
$49.80Price Target Upside16.49% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering6
EPS Forecast (FY)1.44
Revenue Forecast (FY)$202.20M
Napco Security Technologies Business Overview & Revenue Model
Company Description
Napco Security Technologies, Inc. develops, manufactures, and sells electronic security products in the United States and internationally. The company offers access control systems, door-locking products, intrusion and fire alarm systems, and vide...
How the Company Makes Money
NSSC makes money primarily by selling security hardware and related solutions to the professional security channel (distributors, dealers, and integrators) who then install and service end users. A major revenue stream is product sales across its ...
Napco Security Technologies Key Performance Indicators (KPIs)
Any
Revenue by Geography
Breaks down sales by region to reveal where Napco earns its revenue and where the company is expanding or exposed. Highlights concentration risk in specific markets, sensitivity to currency and local economic cycles, and opportunities for international growth or regulatory and geopolitical headwinds that could affect future performance.
Breaks down sales by region to reveal where Napco earns its revenue and where the company is expanding or exposed. Highlights concentration risk in specific markets, sensitivity to currency and local economic cycles, and opportunities for international growth or regulatory and geopolitical headwinds that could affect future performance.
Data provided by:
The Fly
The FlyNapco Security Technologies Earnings Call Summary
Earnings Call Date:Feb 02, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:May 11, 2026
Earnings Call Sentiment Positive
The call conveyed strong operational and financial momentum: record Q2 revenue (+12.2%), double-digit growth in both equipment and recurring revenue, expanding gross margins, robust profitability (operating income +32%, net income +29%, adjusted EBITDA +26%), rising free cash flow, and a debt-free balance sheet with $115M in cash. Key strategic initiatives — including continued StarLink adoption, door-locking strength, and the MVP cloud platform — position the company for continued high-margin recurring revenue growth. Minor headwinds include a modest decline in recurring gross margin (driven by one-time comparative effects and higher data costs), higher tax provision, lower interest income, elevated SG&A on a six-month basis, and that MVP and ADI-driven locking contributions will take more time to scale. Overall, positives (record revenue, margin expansion, strong cash and profitability, strategic product momentum) substantially outweigh the limited operational and timing challenges, implying an upbeat outlook with manageable risks.Positive Updates
Record Q2 Revenue and Year-over-Year Growth
Net revenue of $48.2 million in Q2, a record for the quarter, representing a 12.2% increase versus prior-year Q2; net revenue for the first six months rose 12% to $97.3 million.
Negative Updates
Slight Decline in Recurring Gross Margin
Recurring service gross margin declined modestly to 90.2% from 91.3% a year ago (Q2), attributed to one-time credits that reduced comparative-period royalty expense and marginal increases in data costs for network operations.
Read all updates
Q2-2026 Updates
Positive
Negative
Record Q2 Revenue and Year-over-Year Growth
Net revenue of $48.2 million in Q2, a record for the quarter, representing a 12.2% increase versus prior-year Q2; net revenue for the first six months rose 12% to $97.3 million.
Read all positive updates
Company Guidance
Management reiterated they expect to continue the fiscal‑2026 momentum, calling out record Q2 revenue of $48.2M (+12.2% Y/Y) with equipment revenue $24.3M (+12% Y/Y) and recurring monthly service revenue $23.8M (+12.5% Y/Y) that now implies a prospective annualized recurring revenue run‑rate of ~$99M (up from $95M last quarter); margins and profitability are expected to remain strong (Q2 gross margin 58.6%, equipment margin ~27.6–28%, recurring gross margin 90.2%), with operating income $14.8M (+32%), net income $13.5M (28% of revenue, +29%), adjusted EBITDA $15.3M (31.9% margin, +26%), and free cash flow $14.5M (30.1% margin); they said pricing actions are largely baked in for the year, expect equipment margins to continue improving toward the low‑30%s, anticipate MVP access control to begin contributing meaningfully in the back half of calendar 2026 (more visibility in fiscal 2027), plan modest capex ($0.6M Q2; $0.8M 6 months), and highlighted a strong, debt‑free balance sheet with $115.4M cash/marketable securities and an increased quarterly dividend of $0.15/share.Napco Security Technologies Financial Statement Overview
Summary
Income Statement
84
Very Positive
Balance Sheet
90
Very Positive
Cash Flow
87
Very Positive
| Breakdown | TTM | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 192.03M | 181.62M | 188.82M | 170.00M | 143.59M | 143.59M |
| Gross Profit | 108.01M | 101.03M | 101.75M | 73.23M | 59.16M | 59.16M |
| EBITDA | 54.33M | 48.53M | 55.98M | 32.26M | 20.00M | 20.00M |
| Net Income | 47.42M | 43.41M | 49.82M | 27.13M | 19.60M | 19.60M |
Balance Sheet | ||||||
| Total Assets | 212.82M | 198.14M | 198.14M | 207.75M | 166.65M | 148.58M |
| Cash, Cash Equivalents and Short-Term Investments | 115.38M | 99.18M | 99.18M | 97.72M | 66.75M | 46.80M |
| Total Debt | 5.25M | 5.33M | 5.33M | 5.51M | 5.69M | 7.07M |
| Total Liabilities | 28.01M | 29.54M | 29.54M | 28.86M | 26.48M | 34.78M |
| Stockholders Equity | 184.81M | 168.61M | 168.61M | 178.89M | 140.17M | 113.79M |
Cash Flow | ||||||
| Free Cash Flow | 53.66M | 51.41M | 43.77M | 21.74M | 6.85M | 21.98M |
| Operating Cash Flow | 54.74M | 53.53M | 45.37M | 24.70M | 8.33M | 22.99M |
| Investing Cash Flow | 1.96M | 14.59M | -3.15M | -28.26M | -1.56M | -6.43M |
| Financing Cash Flow | -37.79M | -50.37M | -12.83M | -2.21M | 155.00K | 0.00 |
Napco Security Technologies Technical Analysis
Positive
42.75
Price Trends
42.47
Positive
41.51
Positive
39.17
Positive
Market Momentum
-0.25
Negative
55.49
Neutral
76.83
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 42.75 is above the 20-day moving average (MA) of 41.22, above the 50-day MA of 42.47, and above the 200-day MA of 39.17, indicating a bullish trend. The MACD of -0.25 indicates Negative momentum. The RSI at 55.49 is Neutral, neither overbought nor oversold. The STOCH value of 76.83 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for NSSC.
Napco Security Technologies Risk Analysis
Napco Security Technologies disclosed 29 risk factors in its most recent earnings report. Napco Security Technologies reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Napco Security Technologies Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $1.52B | 27.53 | 27.45% | 1.29% | -2.28% | -9.94% | |
70 Outperform | $5.52B | 10.53 | 16.19% | 2.73% | 4.77% | -22.78% | |
69 Neutral | $1.40B | 97.67 | 12.47% | ― | -2.83% | ― | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
59 Neutral | $1.07B | -36.39 | -30.45% | ― | 41.61% | -1.76% | |
56 Neutral | $5.69B | 9.68 | -18.10% | ― | 15.45% | -488.24% | |
49 Neutral | $54.87M | -1.01 | -153.81% | ― | 5.50% | 51.32% |
* Industrials Sector Average
NSSC
Napco Security Technologies
42.75
21.00
96.55%
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Napco Security Technologies Corporate Events
Business Operations and StrategyExecutive/Board ChangesDividendsFinancial Disclosures
Napco Security Reports Record Quarterly Revenue and Earnings Growth
Positive
Feb 2, 2026
On January 29, 2026, NAPCO Security Technologies appointed veteran business development executive Joseph Pipczynski as Chief Revenue Officer, reporting to President and COO Kevin S. Buchel, in a move aimed at strengthening sales leadership, with S...
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.