NSSC Stock Study (6-5-26)

Posted by Mark on July 9, 2026 at 07:00 | Last modified: June 5, 2026 08:29

I recently did a stock study on NAPCO Security Technologies Inc. (NSSC, $90.45).

M* writes:

     > NAPCO Security Technologies Inc manufactures security products,
     > encompassing access control systems, door-locking products,
     > intrusion and fire alarm systems and video surveillance products.
     > Its products are used for various applications which includes
     > alarm systems like automatic communicators, combination control
     > panels/digital communicators and digital keypad systems, fire
     > alarm control panel and area detectors mainly used for commercial,
     > residential, institutional, industrial and governmental uses.
     > Geographically, the company derives a majority of its revenue
     > from the United States.

Over the past 10 years, this small-size company has grown sales and earnings 10.6% and 20.9% per year, respectively (FY ends Jun 30). Lines are mostly up, straight, and parallel except for sales+EPS decline (dip) in ’20 (’25). Value Line (VL) gives an Earnings Predictability score of 50. Shares outstanding decrease 3.4% (0.4%/year).

Over the past 10 years, PTPM leads peer and industry averages while increasing from 7.4% to 27.6% (’25) with a last-5-year mean of 21.3%. ROE leads peer and industry averages while increasing from 12.2% to 26.3% (’25) with a last-5-year mean of 22.0% (shareholder equity consistently positive and increasing with 12.8% CAGR). Debt-to-Capital is less than peer and industry averages while ranging from 0.0% in ’18-’19 to 12.4% in ’20 with a last-5-year mean of 5.3% (no long-term debt).

Quick ratio is 4.0 and interest coverage N/A per M* who assigns “Narrow” [quantitative] Economic Moat and an A grade for Financial Health (per BetterInvesting® website). VL gives a B+ grade for Financial Strength.

With regard to sales growth:

• YF gives YOY ACE 9.6% and 10.0% for ’26 and ’27, respectively (based on 5 analysts).
• Zacks gives YOY ACE 10.8% and 10.5% for ’26 and ’27 (2 analysts).
• CFRA gives ACE 9.6% YOY and 9.8% per year for ’26 and ’25-’27, respectively (5).

My 7.0% forecast is below the [short-term as no long-term estimates are available] range.

With regard to EPS growth:

• MarketWatch gives ACE 19.6% and 18.4% per year for ’25-’27 and ’25-’28, respectively (based on 6 analysts).
• Nasdaq.com gives YOY ACE 10.8% for ’27 (2 analysts).
• YF gives YOY ACE 17.9% and 8.7% for ’26 and ’27, respectively (2).
• Zacks gives YOY ACE 24.4% and 11.5% for ’26 and ’27, respectively (2).
• CFRA gives ACE 25.2% YOY and 16.7% per year for ’26 and ’25-’27 (2).

My 8.0% forecast is below the short-term-estimate range as no long-term estimates are available. Initial value is 2026 Q3 EPS of $1.04/share (TTM) rather than ’25 EPS of $1.19.

My Forecast High P/E is 34.0. Over the past decade, high P/E increases from 24.5 to 48.8 (’25) with last-5-year mean of 48.3 and a last-5-year-mean average P/E of 34.9. I am near bottom of the range (only 24.5 in ’16 is less).

My Forecast Low P/E is 18.0. Over the past decade, low P/E ranges from 13.4 in ’24 to 29.0 in ’20 and ’22 with a last-5-year mean of 21.5. I am forecasting near bottom of the range (13.4 in ’24, 16.0 in ’25, and 16.5 in ’16 are less).

My Low Stock Price Forecast (LSPF) of $18.70 is default based on initial value from above: 47.7% less than previous close and 29.2% less than the 52-week low.

Since dividend inception 2023, Payout Ratio (PR) has been 8.6%, 26.9%, and 43.3%. My 8.0% forecast is below the range.

These inputs land NSSC in the HOLD zone with a U/D ratio of 1.0. Total Annualized Return (TAR) is 8.0%.

PAR (using Forecast Average—not High—P/E) of 2.5% is less the current risk-free rate (T-bills). If a healthy margin of safety (MOS) anchors the study, then I can proceed based on TAR instead.

To assess MOS, I start by comparing my inputs with those of Member Sentiment (MS). Based on only 29 studies done in the past 90 days (my study and 8 outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 10.2%, 11.3%, 35.0, 21.5, and 24.0%, respectively. I am lower across the board.

MS high / low EPS are $2.11 / $1.29 versus my $1.53 / $1.04 (per share). My high EPS is less due to a lower growth rate and lower initial value.

MS LSPF of $26.50 implies a Forecast Low P/E of 20.5: less than the above-stated 21.5. MS LSPF is 4.5% less than the default $1.29/share * 21.5 = $27.74 resulting in more conservative zoning. MS LSPF is 41.7% greater than mine, however.

MOS is robust in the study because most of my inputs are less than or near bottom of historical/analyst/MS averages/ranges. MS TAR exceeding mine by 5.8% supports the assessment along with my substantially lower LSPF.

With regard to valuation, PEG is 0.9 and 4.0 per M* and my projected P/E, respectively: overvalued on average. Relative Value [(current P/E) / 5-year-mean average P/E] is fair at 0.99. M* reports the stock at a 12% discount.

Especially flying blind in the face of no long-term analyst estimates, I need to see trading near the 52-week low in order to be more interested in this small company.

Per U/D, NSSC would be a BUY under $27/share. Given a forecast high price of $52, the BetterInvesting® TAR criterion would be met [52 / ((14.67 / 100 ) +1 ) ^ 5] ~ $26.

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