Value
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 3.5 |
| P/S | 5.8 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 5.7 |
| PEG | 6.8 |
| Analyst target | 7.5 |
- ▸Forward P/E: 22.5x
- ▸PEG: 1.05
NSSC · Why this verdict
Why NAPCO Security Technologies, In (NSSC) is rated BUY WAIT
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictBUY WAIT
Overall score6.3/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
NAPCO Security Technologies has achieved a perfect earnings beat streak of 4 consecutive quarters with an average surprise of 22%, a wide economic moat, and free cash flow at 131% of net income, establishing it as a high-quality compounder in the security technology space with meaningful analyst upside remaining.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
NAPCO Security Technologies carries a wide economic moat rating, a perfect Piotroski F-Score of 9/9, free cash flow at 131% of net income, and is identified as a compounder with strong returns and growth, placing it in the best-in-class margins category versus peers. Quality breakdown | Economic moat rating is maintained, Piotroski F-Score stays at 8 or above, and free cash flow conversion remains above 100% of net income over the next 12 months. | →Stable |
| CounterNAPCO's moat in security technology faces increasing competitive pressure from larger software and cloud security vendors entering the access control and alarm space. | ||
Analysts have a consensus price target implying 34% upside from the current price of $37.57 to the target of $43.79, providing a reasonable margin of safety and institutional endorsement of the growth thesis. Sentiment breakdown | Stock price moves toward the $43.79 analyst target within 12 months as earnings growth continues to be recognized by the market. | ↑Improving |
| CounterThe death cross technical pattern is present, and the stock is below the 200-day moving average, suggesting near-term price weakness may persist even as the fundamental outlook remains positive. | ||
NAPCO has beaten analyst earnings estimates in all 4 of the last 4 quarters with an average positive surprise of 22.1%, demonstrating consistent and meaningful operational outperformance. Catalyst breakdown | NAPCO maintains a beat rate of at least 3 out of 4 quarters with average positive surprise above 10% over the next four reporting periods. | ↑Improving |
| CounterA 22% average beat streak often leads analysts to reset estimates significantly higher, making future beats much harder to achieve and potentially disappointing momentum investors. | ||
The put/call ratio stands at 2.00 and implied volatility is 71%, indicating that a meaningful portion of options activity is skewed toward downside protection despite the strong fundamental backdrop. Key risks | Put/call ratio declines below 1.2 and implied volatility falls below 50% over the next 12 months as fundamental strength reduces hedging demand. | ↑Improving |
| CounterFor a small-cap stock with market cap of $1.3 billion, elevated put/call ratios can reflect illiquid options markets rather than informed bearish positioning. | ||
NAPCO Security Technologies carries a wide economic moat rating, a perfect Piotroski F-Score of 9/9, free cash flow at 131% of net income, and is identified as a compounder with strong returns and growth, placing it in the best-in-class margins category versus peers.
→StableQuality breakdown
- Expectation
- Economic moat rating is maintained, Piotroski F-Score stays at 8 or above, and free cash flow conversion remains above 100% of net income over the next 12 months.
CounterNAPCO's moat in security technology faces increasing competitive pressure from larger software and cloud security vendors entering the access control and alarm space.
Analysts have a consensus price target implying 34% upside from the current price of $37.57 to the target of $43.79, providing a reasonable margin of safety and institutional endorsement of the growth thesis.
↑ImprovingSentiment breakdown
- Expectation
- Stock price moves toward the $43.79 analyst target within 12 months as earnings growth continues to be recognized by the market.
CounterThe death cross technical pattern is present, and the stock is below the 200-day moving average, suggesting near-term price weakness may persist even as the fundamental outlook remains positive.
NAPCO has beaten analyst earnings estimates in all 4 of the last 4 quarters with an average positive surprise of 22.1%, demonstrating consistent and meaningful operational outperformance.
↑ImprovingCatalyst breakdown
- Expectation
- NAPCO maintains a beat rate of at least 3 out of 4 quarters with average positive surprise above 10% over the next four reporting periods.
CounterA 22% average beat streak often leads analysts to reset estimates significantly higher, making future beats much harder to achieve and potentially disappointing momentum investors.
The put/call ratio stands at 2.00 and implied volatility is 71%, indicating that a meaningful portion of options activity is skewed toward downside protection despite the strong fundamental backdrop.
↑ImprovingKey risks
- Expectation
- Put/call ratio declines below 1.2 and implied volatility falls below 50% over the next 12 months as fundamental strength reduces hedging demand.
CounterFor a small-cap stock with market cap of $1.3 billion, elevated put/call ratios can reflect illiquid options markets rather than informed bearish positioning.
Per-dimension breakdown
Quality
8.6/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 7.2 |
| ROA | 10.0 |
| Gross margin | 7.5 |
| Op margin | 7.1 |
| Net margin | 9.4 |
| Current ratio | 8.1 |
| FCF quality | 9.4 |
| Moat | 8.4 |
| Piotroski F | 10.0 |
- ▸Strong margins: 19%
- ▸Excellent cash conversion: 131% FCF/NI
- ▸Wide economic moat
- ▸Compounder quality: strong returns + growth
Growth
5.3/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.4 |
| EPS growth | 6.3 |
Momentum
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 7.5 |
| OBV | 10.0 |
| MA position | 1.0 |
| Volume | 3.9 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -1.7%/30d — confirmed downtrend
Sentiment
7.6/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.2 |
| Analyst rating | 7.6 |
| Price target | 9.1 |
- ▸Light analyst coverage (6.0) — signal dampened
- ▸Analyst upside: 38%
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
4.3/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 0.0 |
| quality rank | 7.5 |
| growth rank | 2.0 |
- ▸Best-in-class margins
Technical
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 5.5 |
| support resistance | 5.7 |
| 52w position | 5.3 |
Risk (lower is worse)
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.0 |
| days to cover | 3.5 |
| volatility | 6.0 |
| put call | 10.0 |
| implied vol | 3.9 |
| beta | 5.3 |
| debt equity | 9.5 |
Catalyst
7.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| news activity | 8.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Wide-moat business. Accumulate on weakness.
Engine technical detail
verdict_path:
L4:PATH_E_WIDE_MOAT|ENTRY_STICKY:WITHIN_BANDPassed (8)
- MOMENTUM:5.4>=4.5
- ASYMMETRY:3.4>=1.5
- INSIDER:OK
- DEATH_CROSS:QUALITY_MOMENTUM_EXEMPT
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:24d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (0)
none
Warning (3)
- MOMENTUM:5.4<5.5 (soft — BUY_NOW allowed but watch)
- DEATH_CROSS:quality=8.6>=7.5+momentum=5.4>=5.0 exempted
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
3.42
Upside
+20.4%
Downside
6.0%
Sizing output
STARTER
SetupRecovery — Death cross but MACD improving, RSI 53
EdgeCatalyst-Driven — Earnings in 24d with 4/4 beat streak
SuitabilityAggressive — Beta 1.43>1.3, MCap $1.3B<$5B
Investment implication
The STRONG_BUY_WAIT verdict reflects clean gate clearance against Quality at 8.6 and asymmetric R:R of 3.42.
The strongest dimensions are Quality at 8.6, Sentiment at 7.6, and Catalyst at 7.6; the weakest are Peer rank at 4.3, Value at 5.2, and Growth at 5.3. The V9 engine cleared all gates with 3 warnings, producing an asymmetric reward-to-risk of 3.42 and an engine sizing output of STARTER.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Wide Moat High Quality Compounder
Trip ifPiotroski F-Score falls below 7 or free cash flow conversion drops below 80% of net income for 2 consecutive quarters.
- P2Perfect Earnings Beat Streak
Trip ifEPS surprise falls below 0% in at least 2 of the next 4 quarters or average beat magnitude falls below 5%.
- P3Analyst Upside 34pct
Trip ifStock price falls below $32 or analyst consensus target is lowered below $38.
- P4Elevated Options Market Hedging
Trip ifPut/call ratio rises above 3.5 or implied volatility exceeds 100%.