# NAPCO Security Technologies (NSSC.US)

Canonical: https://gigainvestors.com/s/NSSC

Analysis as of: 2026-10-16T07:30:41.572Z. Financial observations: FY1997–FY2026.

Listing currency: USD. Reporting currency: USD.

## Verdict

A wonderful business at too high a price

Quality tests for Buy: pass (profit record: pass; earnings resilience is evidence only). Published buy qualification: no.

Share price: $35.96 per share; close as of 2026-10-15.

Estimated value: low $20.20 per share, central $27.25 per share, high $31.36 per share. Buy at or below the central value $27.25 per share. Valuation as of 2026-10-16T07:30:41.572Z; scenarios are not confidence intervals.

Expected annual return: 8.2% at the stated quote. About 8.2% a year at today's price (required return 10.0%). required return 10.0% a year (10% floor; US 10-year bond 5.1% + 4 points).

## Checklist

### understandable: fail

- 2 revenue declines in the last 10 years (informational)

- operating margin variation exceeds 0.35

- Financial history: 10 years

- Years with declining revenue: 2

- Years with a net loss: 0

- Operating margin variation: 0.44×

Chart: Operating margin; fiscal year observations.

- FY2017: 0.07×

- FY2018: 0.09×

- FY2019: 0.13×

- FY2020: 0.10×

- FY2021: 0.13×

- FY2022: 0.13×

- FY2023: 0.18×

- FY2024: 0.29×

- FY2025: 0.25×

- FY2026: 0.23×

### moat: pass

- ROIC, median of available years: 21.4%

- ROIC, second-lowest year: 11.3%

- Typical minus recent gross margin: -13.2 pp

- Typical gross margin (annual median): 42.5%

- Recent gross margin (lower of latest and 3-year median): 55.6%

- Years with nonpositive capital: 0

- Capital spending / revenue: 1.3%

- ROIC including acquisitions, ten-year median: 25.3%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2017: 9.5%

- FY2018: 13.5%

- FY2019: 19.6%

- FY2020: 11.3%

- FY2021: 22.1%

- FY2022: 20.7%

- FY2023: 30.4%

- FY2024: 55.9%

- FY2025: 53.6%

- FY2026: 67.2%

### economics: pass

- Owner earnings / net income, 5-yr: 1.01×

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: $184M

- Net income, five-year total: $183M

- Return on incremental invested capital: 147.5%

- Working capital / revenue, annual change: -2.6 pp

- Working capital / revenue, change between three-year averages: -18.0 pp

- Working capital / revenue, final three-year average: 29.3%

Chart: Annual owner cash / profit; fiscal year observations.

- FY2022: 1.01×

- FY2023: 1.00×

- FY2024: 1.01×

- FY2025: 1.00×

- FY2026: 1.01×

### management: pass

- Historical market-dollar context (not the management verdict): 2017 to 2026 (9 years)

- buybacks leaned toward cheaper years (informational)

- ROIC first 3 years vs last 3 years: 13.5% vs 55.9%

- Per-share earnings: 0.15 to 1.20 (three-year endpoint medians)

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 10-year annual growth: -0.5%

- Ordinary dilution, 5-year annual growth: -0.5%

- Market cap gain: $1.2B

- Cumulative retained earnings: $170M

- Diluted shares, 10-year annual growth: -0.5%

- Diluted shares, 5-year annual growth: -0.5%

- $1 test, starting fiscal year: FY2017

- $1 test, ending fiscal year: FY2026

- Per-share value growth: 29.4%

- Per-share value change: $1.05

- Per-share value, starting three-year median: $0.15

- Per-share value, ending three-year median: $1.20

- Buybacks concentrated in cheaper years (correlation): 0.10

- Average buyback yield: 1.1%

- Buyback history: 5 years

- Debt-funded buybacks: No

- Acquisition spending: $0

- Cumulative net income, 10 years: $236M

- ROIC, first three-year median: 13.5%

- ROIC, last three-year median: 55.9%

Chart: Earnings per share; fiscal year observations.

- FY2017: $0.15

- FY2018: $0.20

- FY2019: $0.33

- FY2020: $0.21

- FY2021: $0.53

- FY2022: $0.53

- FY2023: $0.73

- FY2024: $1.34

- FY2025: $1.19

- FY2026: $1.20

### accounting: pass

- Sloan accruals: -7.6%

- Receivables to sales index (DSRI): 1.07×

- Restructuring years, last five: 0

- Stock compensation / operating cash flow: 1.6%

- Earnings backed by cash: Yes

- Operating cash / earnings: 1.42×

- Accounting red flags: 0

- Goodwill and intangibles / equity: 0.02×

Chart: Sloan accruals; fiscal year observations.

- FY2017: 4.4%

- FY2018: -0.3%

- FY2019: 4.2%

- FY2020: -2.4%

- FY2021: -2.3%

- FY2022: 6.8%

- FY2023: 1.2%

- FY2024: 2.2%

- FY2025: -5.1%

- FY2026: -7.6%

## Holders

- [Terry Smith](https://gigainvestors.com/FS): tracked 13F investor; follow the investor page for holding quarter and amounts.

## Price story

Down 36% since Jul 2024 · sales +11.4%

Story as of 2026-10-16T09:59:16.712Z; price observation 2026-10-15.

Price needs cash profits to grow 10.5% a year for ten years

- 2025-07-04: NAPCO Security FQ4 2024 slides: recurring revenue surges 27%, driving margin expansion ([investing.com](https://www.investing.com/news/company-news/napco-security-fq4-2024-slides-recurring-revenue-surges-27-driving-margin-expansion-93CH-4123466))

- 2025-08-25: Napco signals double-digit equipment sales growth for fiscal 2026 as recurring revenue momentum accelerates ([seekingalpha.com](https://seekingalpha.com/news/4489003-napco-signals-double-digit-equipment-sales-growth-for-fiscal-2026-as-recurring-revenue?utm_source=feed_news_all&utm_medium=referral&feed_item_type=news))

- 2026-02-02: Napco signals $99M recurring revenue run rate through Q2 growth and new leadership ([seekingalpha.com](https://seekingalpha.com/news/4545858-napco-signals-99m-recurring-revenue-run-rate-through-q2-growth-and-new-leadership?utm_source=feed_news_all&utm_medium=referral&feed_item_type=news))

### Sales · FY2025–2026

sales +11.4%; source https://www.sec.gov/Archives/edgar/data/69633/000110465926100081/nssc-20260630x10k.htm; observed 2026-08-24.

- FY2017: $87M 

- FY2018: $92M 

- FY2019: $103M 

- FY2020: $101M 

- FY2021: $144M 

- FY2022: $144M 

- FY2023: $170M 

- FY2024: $189M 

- FY2025: $182M 

- FY2026: $202M 

### Gross margin · FY2026

gross margin 59.2%; source https://www.sec.gov/Archives/edgar/data/69633/000110465926100081/nssc-20260630x10k.htm; observed 2026-08-24.

- FY2017: 33.9% 

- FY2018: 41.4% 

- FY2019: 42.6% 

- FY2020: 42.3% 

- FY2021: 41.2% 

- FY2022: 41.2% 

- FY2023: 43.1% 

- FY2024: 53.9% 

- FY2025: 55.6% 

- FY2026: 59.2% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Operates in security & protection services; annual sales are USD 202.3 million.

- Source: https://www.sec.gov/Archives/edgar/data/69633/000110465926100081/nssc-20260630x10k.htm (filed 2026-08-24); FY2026: revenue 202316000; grossProfit 119791000; margin = grossProfit / revenue.

### Why customers stay

Margins ranged from 53.9% to 59.2% during 2024–26; it earns 21.4% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-08-24); FY2024: grossProfit / revenue = 53.9%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-08-24); FY2025: grossProfit / revenue = 55.6%.

- Source: https://www.sec.gov/Archives/edgar/data/69633/000110465926100081/nssc-20260630x10k.htm (filed 2026-08-24); FY2026: grossProfit / revenue = 59.2%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-08-24); 10-year return on capital observations [[2017,0.09512641146200379],[2018,0.13490334237044177],[2019,0.19584839276682664],[2020,0.11256801327361392],[2021,0.22076994467853703],[2022,0.20668768721904676],[2023,0.3038991483875579],[2024,0.5590857853050026],[2025,0.5363876267122668],[2026,0.6724040717203826]]; median 0.2137288159487919. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Can it raise prices

Kept about a 41% gross margin through 2022 cost inflation.

- Source: https://www.sec.gov/Archives/edgar/data/69633/000110465926100081/nssc-20260630x10k.htm (filed 2026-08-24); Gross margin observations: [[2021,0.41196994282451094],[2022,0.41196994282451094],[2023,0.43078995511685503]]; range within 2 percentage points.

### Where the cash goes

Paid dividends in 7 of 10 years.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-08-24); FY2017: growth capex 40000; upkeep 1374000; owner earnings 5599000. Growth capex / owner earnings = 0.007144132880871584.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-08-24); FY2018: growth capex 0; upkeep 1280000; owner earnings 7778000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-08-24); FY2019: growth capex 579000; upkeep 1409000; owner earnings 12223000. Growth capex / owner earnings = 0.047369712836455864.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-08-24); FY2020: growth capex 0; upkeep 1615000; owner earnings 7675000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-08-24); FY2021: growth capex 0; upkeep 1007000; owner earnings 20288000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-08-24); FY2022: growth capex 0; upkeep 1482000; owner earnings 19888000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-08-24); FY2023: growth capex 1032000; upkeep 1930000; owner earnings 27127000. Growth capex / owner earnings = 0.03804327791499244.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-08-24); FY2024: growth capex 0; upkeep 1594000; owner earnings 50387000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-08-24); FY2025: growth capex 0; upkeep 2116000; owner earnings 43566000. Growth capex / owner earnings = 0.

- Source: https://www.sec.gov/Archives/edgar/data/69633/000110465926100081/nssc-20260630x10k.htm (filed 2026-08-24); FY2026: growth capex 0; upkeep 1917000; owner earnings 43318000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-08-24); Dividend observations: [[2017,0],[2018,0],[2019,0],[2020,3984000],[2021,2298000],[2022,2298000],[2023,2298000],[2024,13258000],[2025,13632000],[2026,20334000]]. Zero only counted when supported by a complete cash-flow statement.

### Are managers owners

Insiders own 3.5% of the company.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-15); NSSC.US SharesStats.PercentInsiders = 3.454 percentage points; cache date 2026-10-15.

### What could break it

We have historically invested approximately 6% to 7% of annual revenues on R&D to mitigate this risk.

- Source: https://www.sec.gov/Archives/edgar/data/69633/000110465926100081/nssc-20260630x10k.htm (filed 2026-08-24); There can be no assurance that competitors will not develop products that are superior to the Company’s products. We have historically invested approximately 6% to 7% of annual revenues on R&D to mitigate this risk. However, many of our competitors have dedicated more resources and capabilities to R&D, including committing more engineers and capital expenditures, to develop and design new products that may enter the market sooner or with more penetration.

### What the price says

The price assumes cash profits grow 10.5% yearly over ten years; actual growth was 21.5%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-08-24); Ten-year compound average after fade. Initial solved rate 0.13768706952778842. Price 35.96; FX 1; discount 0.1; same standard ten-year fade to terminal 0.03. FY2016 owner earnings/share 0.17201227903038002 → FY2026 1.2069320999693516. Closing-price date 2026-10-15.

## Monthly share-price history (USD per share)

- 2016-10: $3.50 per share

- 2016-11: $4.28 per share

- 2016-12: $4.25 per share

- 2017-01: $4.80 per share

- 2017-02: $4.33 per share

- 2017-03: $5.10 per share

- 2017-04: $5.30 per share

- 2017-05: $4.78 per share

- 2017-06: $4.70 per share

- 2017-07: $4.58 per share

- 2017-08: $3.93 per share

- 2017-09: $4.85 per share

- 2017-10: $5.08 per share

- 2017-11: $5.00 per share

- 2017-12: $4.38 per share

- 2018-01: $4.58 per share

- 2018-02: $5.05 per share

- 2018-03: $5.85 per share

- 2018-04: $5.35 per share

- 2018-05: $5.93 per share

- 2018-06: $7.33 per share

- 2018-07: $7.90 per share

- 2018-08: $7.55 per share

- 2018-09: $7.48 per share

- 2018-10: $7.04 per share

- 2018-11: $8.27 per share

- 2018-12: $7.88 per share

- 2019-01: $7.86 per share

- 2019-02: $10.75 per share

- 2019-03: $10.37 per share

- 2019-04: $12.39 per share

- 2019-05: $13.36 per share

- 2019-06: $14.84 per share

- 2019-07: $14.48 per share

- 2019-08: $17.24 per share

- 2019-09: $12.76 per share

- 2019-10: $15.18 per share

- 2019-11: $15.63 per share

- 2019-12: $14.70 per share

- 2020-01: $14.70 per share

- 2020-02: $10.17 per share

- 2020-03: $7.59 per share

- 2020-04: $10.02 per share

- 2020-05: $11.36 per share

- 2020-06: $11.70 per share

- 2020-07: $13.19 per share

- 2020-08: $12.46 per share

- 2020-09: $11.75 per share

- 2020-10: $12.06 per share

- 2020-11: $15.25 per share

- 2020-12: $13.11 per share

- 2021-01: $12.96 per share

- 2021-02: $15.57 per share

- 2021-03: $17.42 per share

- 2021-04: $16.66 per share

- 2021-05: $16.27 per share

- 2021-06: $18.19 per share

- 2021-07: $17.68 per share

- 2021-08: $19.57 per share

- 2021-09: $21.54 per share

- 2021-10: $23.98 per share

- 2021-11: $23.24 per share

- 2021-12: $24.99 per share

- 2022-01: $20.79 per share

- 2022-02: $20.39 per share

- 2022-03: $20.52 per share

- 2022-04: $17.50 per share

- 2022-05: $19.61 per share

- 2022-06: $20.59 per share

- 2022-07: $25.66 per share

- 2022-08: $29.66 per share

- 2022-09: $29.08 per share

- 2022-10: $28.42 per share

- 2022-11: $26.38 per share

- 2022-12: $27.48 per share

- 2023-01: $28.97 per share

- 2023-02: $31.60 per share

- 2023-03: $37.58 per share

- 2023-04: $31.00 per share

- 2023-05: $37.19 per share

- 2023-06: $34.65 per share

- 2023-07: $37.48 per share

- 2023-08: $24.78 per share

- 2023-09: $22.25 per share

- 2023-10: $18.37 per share

- 2023-11: $30.60 per share

- 2023-12: $34.25 per share

- 2024-01: $34.75 per share

- 2024-02: $45.03 per share

- 2024-03: $40.16 per share

- 2024-04: $40.70 per share

- 2024-05: $49.65 per share

- 2024-06: $51.95 per share

- 2024-07: $55.81 per share

- 2024-08: $46.38 per share

- 2024-09: $40.46 per share

- 2024-10: $38.48 per share

- 2024-11: $39.23 per share

- 2024-12: $35.56 per share

- 2025-01: $36.70 per share

- 2025-02: $24.56 per share

- 2025-03: $23.02 per share

- 2025-04: $22.85 per share

- 2025-05: $27.90 per share

- 2025-06: $29.69 per share

- 2025-07: $30.53 per share

- 2025-08: $38.05 per share

- 2025-09: $42.95 per share

- 2025-10: $44.15 per share

- 2025-11: $40.40 per share

- 2025-12: $41.70 per share

- 2026-01: $36.89 per share

- 2026-02: $46.61 per share

- 2026-03: $39.39 per share

- 2026-04: $46.75 per share

- 2026-05: $37.53 per share

- 2026-06: $37.98 per share

- 2026-07: $37.08 per share

- 2026-08: $36.24 per share

- 2026-09: $35.62 per share

- 2026-10: $35.96 per share

## Annual estimated value (USD per share)

- FY2017: low $1.68 per share, central $1.91 per share, high $2.21 per share

- FY2018: low $2.04 per share, central $2.31 per share, high $2.67 per share

- FY2019: low $2.83 per share, central $3.60 per share, high $4.18 per share

- FY2020: low $3.10 per share, central $3.88 per share, high $4.46 per share

- FY2021: low $5.65 per share, central $7.50 per share, high $8.60 per share

- FY2022: low $7.99 per share, central $10.62 per share, high $12.17 per share

- FY2023: low $11.20 per share, central $14.91 per share, high $17.06 per share

- FY2024: low $12.36 per share, central $16.55 per share, high $18.99 per share

- FY2025: low $13.41 per share, central $18.04 per share, high $20.73 per share

- FY2026: low $20.13 per share, central $27.16 per share, high $31.25 per share

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

## Sources

[Original 10-K filing](https://www.sec.gov/Archives/edgar/data/69633/000110465926100081/nssc-20260630x10k.htm); period 2026-06-30, filed 2026-08-24.

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.