Napco Security Technologies, Inc.
Orin's own judgment of how firmly the evidence points one way — not the chance the price goes up.
Napco Security Technologies remains a hold as fiscal 2026 results show revenue recovering to $202.3M with 11.4% YoY growth and a robust 59.2% gross margin, but net income was essentially flat at $43.0M versus $43.4M the prior year, and the stock trades at a 29.5x trailing PE — a 73% premium to the peer median of 17.0x — that demands sustained earnings acceleration to justify.
The founder and Executive Chairman Richard Soloway sold 379,529 shares at $34.50 on 27 Aug and 95,471 shares at $35.93 on 26 Aug, contributing to 24-month net insider selling of 976,453 shares worth $37.9M, and a securities fraud investigation was announced on 22 Sep covering the period February 2024 to February 2025, creating a meaningful overhang. The franchise generates strong free cash flow of $59.2M with only $5.2M of debt, and recent quarterly earnings beats including a 31.6% surprise are encouraging, but the combination of legal risk, aggressive insider selling, and a rich valuation warrants caution.
What could go wrong
- Securities fraud litigation. A securities fraud complaint was filed against Napco covering the period February 5, 2024 to February 3, 2025, and Kaskela Law announced a stockholder investigation on 22 Sep; adverse outcomes could trigger settlements or restatements.
- Founder insider selling. Founder and Executive Chairman Richard Soloway sold 379,529 shares at $34.50 and 95,471 shares at $35.93 in late August 2026; 24-month net insider dispositions totaled 976,453 shares for $37.9M of net selling.
- Valuation premium. At 29.5x trailing PE versus a peer median of 17.0x and 6.3x sales versus 1.3x, NSSC trades at a 73% PE premium and 394% PS premium to peers, leaving little room for execution missteps.
- Margin compression. FY2026 operating margin contracted to 22.6% from 25.5% in FY2025 and 28.5% in FY2024, and FY2026 Q3 posted an operating loss of $1.19M, signaling cost pressure despite revenue growth.
What would change my mind
Where this comes from: fundamentals, to 30 Jun · FY25 and FY26 fundamentals · peer comparison · insider trades. Orin's read on NSSC; not advice.
How has the share price moved?
Down 9.9% over twelve months, from $44.10 on 27 Oct 2025 to $39.73 at the Tue 27 Oct 2026 close. Its highest close in that time was $47.23 on 25 Feb 2026; the last close is 15.9% below it.
- Green line: the closing price each trading day.
- Grey line: the average closing price over the last 50 trading days.
- Dashed amber line: the same over the last 200 trading days — a slower, smoother line.
- Bars along the bottom: shares traded each day — green when it closed higher than the day before, rose when lower (the most, 6.8M, on 12 Mar 2026).
- Flags: the company's filings, on the day they were made (a 10-Q is the quarterly report and a 10-K the annual report; an 8-K reports a major event).
- Rose flags: large share sales by the company's own officers and directors, from the Form 4 each one files after trading.
On file
All NSSC filingsLargest holders · 13F Q2 2026
Money flow| Filer | Position | Of fund |
|---|---|---|
| BlackRock | $213.9M | 0.0% |
| Vanguard Capital Management | $58.0M | 0.0% |
| State Street | $57.4M | 0.0% |
| Vanguard Portfolio Management | $56.8M | 0.0% |
| Geode Capital Management | $45.5M | 0.0% |
| Wellington Management Group | $41.9M | 0.0% |
| Morgan Stanley | $36.5M | 0.0% |
| Northern Trust | $23.2M | 0.0% |
| Royal Bank of Canada | $15.4M | 0.0% |
| Point72 Asset Management | $14.4M | 0.0% |
55 of the 815 filers we track · quarter ended Q2 2026 · positions, not flows
Insiders, last 24 months: 44 Form 4 filings; open-market trades net −$33.7M. Of the 44 on hand, 0 were open-market purchases and 8 sales — the rest are grants, option exercises and tax withholding.
Ask Orin about NSSC
Orin answers questions about NSSC from its filings, transcripts and numbers — with the source behind every claim. Your own desk starts with 3 free days, card required.
Start 3 free days →How is it priced, against its own past and its sector?
Priced at 32.8× its last 12 months of profit (Tue 27 Oct close) — higher than in 2 of its last 5 fiscal years (middle 38.8×); the typical Industrials company on the NASDAQ is at 18.4×.
| Measure | Now | Its usual | Sector |
|---|---|---|---|
| P/E | 32.8×below usual | 38.8× | 18.4× |
| P/S | 7.02×near usual | 6.70× | — |
| EV/EBITDA | 25.0×below usual | 30.4× | — |
| P/B | 7.4×near usual | 7.1× | — |
- "Its usual" is the middle of its own last 5 fiscal years.
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
P/S: the company's total market value divided by one year of revenue. Used when there is no profit to measure.
EV/EBITDA: the price of the whole company (its shares plus its debt, minus its cash) divided by one year of operating profit before interest, tax and write-downs.
P/B: the share price divided by the book value per share — what the company owns minus what it owes, as its accounts record it. When book value is tiny, P/B swings wildly and says little.
What do the analysts who cover it publish?
Few analysts publish on it: 6 firms rated it in the last 18 months. Every 12-month price target on file is $52 (the low and the high are the same, so it may be a single analyst's) — 31% above the Tue 27 Oct close price. With so few, it is not a consensus; it is their published opinion, not Orin's.
$52
$52 – $52 · +31% against the last close
- 6 buy or overweight
- 0 hold
- 0 underweight or sell
Price target: the share price an analyst publishes for about 12 months ahead. It is the opinion of the firm that wrote it; the average is across the firms that cover the company.
Overweight / underweight: analysts' rating words: overweight means the firm expects the stock to do better than the others it covers, underweight worse. Their words, not Orin's.
How is it priced next to the companies it is compared to?
Priced at 32.8× its last 12 months of profit. Only 2 of the 3 companies it is compared to made a profit (ADT 8.9×, OSIS 21.7×), so there is no typical P/E.
| Company | Market value | P/E | EV/EBITDA | Gross margin | Net margin | ROE |
|---|---|---|---|---|---|---|
| NSSCNapco Security Technologies, Inc. | $1B | 32.8× | 25.0× | 59.2% | 21.3% | 24% |
| ADTADT Inc. | $5B | 8.9× | 4.7× | 51.4% | 12.0% | 17% |
| EVLVEvolv Technologies Holdings, Inc. | $824M | lost money | n/m | 50.0% | −3.0% | −5% |
| OSISOSI Systems, Inc. | $3B | 21.7× | 14.7× | 33.2% | 8.7% | 18% |
- EVLV: lost money over the last 12 months, so no P/E.
- EVLV: EV/EBITDA is not meaningful (n/m) — its cash exceeds its market value plus debt, or the business lost money before depreciation.
- The list of companies is the data vendor's choice, so it can include a company a person would not have picked.
Market value: the share price times the number of shares — what the whole company is priced at.
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
EV/EBITDA: the price of the whole company (its shares plus its debt, minus its cash) divided by one year of operating profit before interest, tax and write-downs.
Gross margin: the share of each $1 of sales left after the direct cost of making what was sold.
Net margin: the share of each $1 of sales kept as profit after every cost. Below zero, the company lost money.
ROE: return on equity: one year of profit as a share of the shareholders' money in the business (its book value).
Is it priced high or low compared with its own past?
Priced at 32.8× its last 12 months of profit (Tue 27 Oct close). It has no full fiscal year on file since its history starts, so there is nothing of its own to compare with.
- Now32.8×
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
Fiscal year (FY): the company's own 12-month accounting year, which need not match the calendar year.
How has its sector been priced?
Industrials companies on the NASDAQ were priced at a typical 18.4× their yearly profit (Tue 27 Oct close).
- Now18.4×
- Each year is the middle of that calendar year's daily sector P/E; "Now" is the Tue 27 Oct close figure, the same one in the table above.
Sector P/E: the middle P/E of the companies in the same sector on the same stock exchange, as the data vendor works it out each day.
What does a cash-flow model say a share is worth?
A standard cash-flow model puts it at $27 a share — 31% below the $39.38 price it was computed against (27 Oct).
| Model | Value a share | Against the price then |
|---|---|---|
| Standard | $27 | 31% below $39.38 |
| Levered | $43 | 9% above $39.38 |
Discounted cash flow: a model's estimate of what the company is worth today, from the cash it is forecast to make in future years. Small changes in the forecast move it a lot, and it says little about a company that loses money.
Standard / levered: two versions of the cash-flow model: the standard one counts the cash before the company pays its lenders, the levered one after.