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NEW YORK (TheStreet) -- Napco Security Tech (NSSC) has been downgraded by TheStreet Ratings from Buy to Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate NAPCO SECURITY TECH INC (NSSC) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. 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 and increase in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and weak operating cash flow."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 1.8%. Since the same quarter one year prior, revenues slightly increased by 0.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- NSSC's debt-to-equity ratio is very low at 0.26 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, NSSC has a quick ratio of 1.93, which demonstrates the ability of the company to cover short-term liquidity needs.
- NAPCO SECURITY TECH INC reported flat earnings per share in the most recent quarter. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. However, the consensus estimates suggest that there will be an upward trend in the coming year. During the past fiscal year, NAPCO SECURITY TECH INC increased its bottom line by earning $0.18 versus $0.17 in the prior year. This year, the market expects an improvement in earnings ($0.26 versus $0.18).
- NSSC's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 30.19%, which is also worse than the performance of the S&P 500 Index. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, NSSC is still more expensive than most of the other companies in its industry.
- 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.
- You can view the full analysis from the report here: NSSC Ratings Report