Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. NEW YORK (TheStreet) -- Napco Security Systems (Nasdaq:NSSC) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.
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- The revenue growth came in higher than the industry average of 4.7%. Since the same quarter one year prior, revenues slightly increased by 9.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The current debt-to-equity ratio, 0.41, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, NSSC has a quick ratio of 2.50, which demonstrates the ability of the company to cover short-term liquidity needs.
- NAPCO SECURITY TECH INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. During the past fiscal year, NAPCO SECURITY TECH INC increased its bottom line by earning $0.17 versus $0.12 in the prior year.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Electronic Equipment, Instruments & Components industry average. The net income increased by 74.3% when compared to the same quarter one year prior, rising from $1.84 million to $3.21 million.
- 40.37% is the gross profit margin for NAPCO SECURITY TECH INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 14.72% is above that of the industry average.
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