Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model
NEW YORK (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.
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Highlights from the ratings report include:
- Net operating cash flow has significantly increased by 94.64% to $1.60 million when compared to the same quarter last year. In addition, NAPCO SECURITY TECH INC has also vastly surpassed the industry average cash flow growth rate of 2.13%.
- Compared to its closing price of one year ago, NSSC's share price has jumped by 42.46%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Electronic Equipment, Instruments & Components industry. The net income has significantly decreased by 159.9% when compared to the same quarter one year ago, falling from -$0.17 million to -$0.43 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, NAPCO SECURITY TECH INC's return on equity is below that of both the industry average and the S&P 500.
Napco Security Technologies, Inc. engages in the manufacture and sale of security products. The company offers electronic locking devices, intrusion and fire alarms, and building access control systems for commercial, residential, institutional, industrial, and governmental applications. The company has a P/E ratio of 28.3, above the S&P 500 P/E ratio of 17.7. Napco Security Systems has a market cap of $59.4 million and is part of the services sector and diversified services industry. Shares are up 24.9% year to date as of the close of trading on Tuesday.
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