NEW YORK (
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth, solid stock price performance and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
Highlights from the ratings report include:
- 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 turned its bottom line around by earning $0.06 versus -$0.35 in the prior year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electronic Equipment, Instruments & Components industry. The net income increased by 96.8% when compared to the same quarter one year prior, rising from $0.16 million to $0.31 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 5.6%. Since the same quarter one year prior, revenues slightly increased by 0.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- NSSC's debt-to-equity ratio of 0.62 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.85 is weak.
Napco Security Technologies, Inc., together with its subsidiaries, manufactures and sells security products for intrusion, fire, video, wireless, access control, and door locking systems. The company has a P/E ratio of 21.2, below the average diversified services industry P/E ratio of 25.8 and above the S&P 500 P/E ratio of 17.7. Napco Security Systems has a market cap of $54.2 million and is part of the
industry. Shares are down 0.4% year to date as of the close of trading on Thursday.
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-- Written by a member of TheStreet RatingsStaff