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Napco Security Technologies
(NASDAQ:NSSC)
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Rating:70Outperform
Price Target:
$42.00
▲(17.52% Upside)
Action:Upgraded
Date:07/09/26
The score is primarily driven by strong financial quality—high margins, very low leverage, and robust free cash flow—tempered by cooling growth/profitability versus prior peaks. Technicals are neutral with the stock still below longer-term moving averages, and valuation is a meaningful headwind given the high P/E despite a modest dividend yield.
Positive Factors
High Profitability
Sustained gross and net margins near 57% and 19% reflect durable product mix and pricing power in security hardware and services. High margins support reinvestment, dividends and resilience to cost swings, underpinning long-term cash generation and competitive positioning.
Negative Factors
Cooling Growth & Eased Margins
Revenue and profitability have moderated from prior peaks, reducing momentum. Slower top-line growth and easing margins constrain long-term reinvestment capacity and increase sensitivity to competitive pricing, making sustained high returns harder without renewed demand or product cycles.
Read all positive and negative factors
Positive Factors
Negative Factors
High Profitability
Sustained gross and net margins near 57% and 19% reflect durable product mix and pricing power in security hardware and services. High margins support reinvestment, dividends and resilience to cost swings, underpinning long-term cash generation and competitive positioning.
Read all positive factors
Napco Security Technologies Key Performance Indicators (KPIs)
Any
Revenue by Geography
Shows how much revenue comes from different regions (e.g., U.S., EMEA, Asia), revealing reliance on particular markets, exposure to currency and local economic cycles, and where Napco may have room to expand or face regulatory or competitive risks.
Shows how much revenue comes from different regions (e.g., U.S., EMEA, Asia), revealing reliance on particular markets, exposure to currency and local economic cycles, and where Napco may have room to expand or face regulatory or competitive risks.
Data provided by:
The Fly
The FlyNapco Security Technologies (NSSC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.35B
Dividend Yield1.53%
Average Volume (3M)424.23K
Price to Earnings (P/E)36.7
Beta (1Y)1.47
Revenue Growth8.83%
EPS Growth-16.34%
CountryUS
Employees1,061
SectorIndustrials
Sector Strength72
IndustrySecurity & Protection Services
Share Statistics
EPS (TTM)1.03
Shares Outstanding35,727,337
10 Day Avg. Volume258,081
30 Day Avg. Volume424,227
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 Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$51.50Price Target Upside44.10% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
EPS Forecast (FY)1.63
Revenue Forecast (FY)$219.07M
Napco Security Technologies Business Overview & Revenue Model
Company Description
Operating both within the U.S. and globally, Napco Security Technologies, Inc. (NSSC) specializes in the creation, production, and distribution of advanced electronic security solutions. Their comprehensive product portfolio includes access manage...
How the Company Makes Money
NSSC primarily makes money by selling security hardware and related solutions through professional distribution channels (e.g., security equipment distributors, dealers, and integrators) who then install and service systems for end users. A key co...
Napco Security Technologies Earnings Call Summary
Earnings Call Date:May 04, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:Aug 24, 2026
Earnings Call Sentiment Positive
The call presented strong, broad-based financial progress: double-digit revenue growth, accelerating recurring revenue (now >50% of sales) with very high recurring gross margins (~90%), expanding overall gross margin (~60%), significant EBITDA and free cash flow growth, a debt-free balance sheet with $125M in cash, and continued focus on recurring revenue expansion and margin improvement. Principal negatives were a material one-time $16M litigation settlement, modest tariff exposure (~$2M annually), and the fact that the new MVP cloud product has not yet contributed meaningful recurring revenue (expected later). On balance, the positive operational and financial momentum substantially outweighs the one-time and near-term challenges.Positive Updates
Revenue Growth
Net revenue increased 11.8% year-over-year to $49.2M for the quarter (9 months: +11.9% to $146.5M), driven by both recurring services and equipment sales.
Negative Updates
One-Time Litigation Settlement Charge
Recorded a $16.0M litigation settlement charge for the 3- and 9-month periods, reducing GAAP comparability and generating a material one-time cash outflow (settlement expected to be paid in current quarter).
Read all updates
Q3-2026 Updates
Positive
Negative
Revenue Growth
Net revenue increased 11.8% year-over-year to $49.2M for the quarter (9 months: +11.9% to $146.5M), driven by both recurring services and equipment sales.
Read all positive updates
Company Guidance
Management's guidance emphasized three priorities—grow high‑margin recurring service revenue, continue improving equipment/product margins, and sustain strong profitability and cash generation—backed by specific metrics: recurring revenue now represents ~51% of sales with Q3 recurring monthly revenue of $24.9M (up 15.4%) and an annualized run rate of ≈$101M; Q3 equipment revenue was $24.2M with equipment gross margin ~28.7% (management targeting 30%+ with better mix and volume); overall Q3 gross margin ~60%; non‑GAAP net income was $13.9M ($0.39/sh), adjusted EBITDA $15.8M (32.2% margin) and Q3 free cash flow $16M (32.6% margin); R&D is being maintained around 7–7.5% of revenue, SG&A roughly ~22% of revenue, capex modest ($1.5M YTD), tariff exposure ~<$2M/year at a 10% rate, and the company has $125M in cash, no debt, $153.8M working capital (current ratio 4.9:1); management also expects MVP to begin contributing meaningful recurring revenue around October 2026, will continue the $0.15/share dividend, and remains opportunistic on M&A or buybacks.Napco Security Technologies Financial Statement Overview
Summary
Income Statement
80
Positive
Balance Sheet
92
Very Positive
Cash Flow
88
Very Positive
| Breakdown | TTM | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 197.23M | 181.62M | 188.82M | 170.00M | 143.59M | 143.59M |
| Gross Profit | 112.37M | 101.03M | 101.75M | 73.23M | 59.16M | 59.16M |
| EBITDA | 45.38M | 52.34M | 58.55M | 33.16M | 23.90M | 23.90M |
| Net Income | 36.89M | 43.41M | 49.82M | 27.13M | 19.60M | 19.60M |
Balance Sheet | ||||||
| Total Assets | 222.01M | 198.14M | 198.14M | 207.75M | 166.65M | 148.58M |
| Cash, Cash Equivalents and Short-Term Investments | 124.95M | 99.18M | 99.18M | 97.72M | 66.75M | 46.80M |
| Total Debt | 5.22M | 5.33M | 5.33M | 5.51M | 5.69M | 7.07M |
| Total Liabilities | 44.23M | 29.54M | 29.54M | 28.86M | 26.48M | 34.78M |
| Stockholders Equity | 177.78M | 168.61M | 168.61M | 178.89M | 140.17M | 113.79M |
Cash Flow | ||||||
| Free Cash Flow | 56.37M | 51.41M | 43.77M | 21.74M | 6.85M | 21.98M |
| Operating Cash Flow | 58.12M | 53.53M | 45.37M | 24.70M | 8.33M | 22.99M |
| Investing Cash Flow | 3.87M | 14.59M | -3.15M | -28.26M | -1.56M | -6.43M |
| Financing Cash Flow | -20.99M | -50.37M | -12.83M | -2.21M | 155.00K | 0.00 |
Napco Security Technologies Technical Analysis
Negative
35.74
Price Trends
37.41
Positive
38.85
Negative
40.17
Negative
Market Momentum
0.32
Positive
47.84
Neutral
11.80
Positive
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 35.74 is below the 20-day moving average (MA) of 38.23, below the 50-day MA of 37.41, and below the 200-day MA of 40.17, indicating a neutral trend. The MACD of 0.32 indicates Positive momentum. The RSI at 47.84 is Neutral, neither overbought nor oversold. The STOCH value of 11.80 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 |
|---|---|---|---|---|---|---|---|
81 Outperform | $1.44B | 47.09 | 21.25% | ― | 15.65% | ― | |
72 Outperform | $5.27B | 9.60 | 16.83% | 3.13% | 2.10% | 6.68% | |
70 Outperform | $1.35B | 36.70 | 20.86% | 1.62% | 8.83% | -16.34% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
57 Neutral | $985.33M | -216.92 | -4.53% | ― | 41.67% | 94.89% | |
54 Neutral | $3.19B | 8.90 | 14.70% | ― | 3.42% | ― | |
46 Neutral | $34.01M | -0.43 | -152.20% | ― | 88.02% | 63.33% |
* Industrials Sector Average
NSSC
Napco Security Technologies
37.80
7.84
26.18%
ADT
Adt
7.39
-1.00
-11.87%
ARLO
Arlo Technologies
13.57
-3.27
-19.42%
REZI
Resideo Technologies
21.54
-0.79
-3.56%
EVLV
Evolv Technologies Holdings
5.64
-2.19
-27.97%
KSCP
Knightscope Inc Class A
1.46
-3.84
-72.45%
Napco Security Technologies Corporate Events
Business Operations and StrategyExecutive/Board ChangesRegulatory Filings and Compliance
Napco Security Technologies Announces CEO Leadership Transition
Positive
Jul 8, 2026
On July 8, 2026, NAPCO Security Technologies announced an executive leadership transition in which founder Richard Soloway moved from Chairman and Chief Executive Officer to Founder and Executive Chairman, while longtime executive Kevin Buchel, pr...
DividendsFinancial DisclosuresLegal Proceedings
Napco Security Posts Strong Q3 2026 Revenue Growth
Positive
May 4, 2026
In the third quarter of fiscal 2026, ended March 31, NAPCO Security Technologies reported net revenue of $49.2 million, up 11.8% year on year, driven by an 8.4% rise in equipment sales to $24.2 million and a 15.4% increase in recurring service rev...
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.