|
Related Topics
|
Category: Stock Market and Napco Security
Date: 3 September 2019 Stock Price: $34.48 We take a look at the 4th quarter earnings of their 2019 fiscal year for NAPCO security technologies a leading provider of high-technology electronic security systems
|
About NAPCO security technologies
NAPCO Security Technologies, Inc. is one of the world's leading solutions providers and manufacturers of high-technology electronic security (including recurring service fee revenue), IoT connected home, video, fire alarm, access control and door locking systems. The Company consists of four Divisions: NAPCO, its security and IoT connected home segment, plus three wholly-owned subsidiaries: Alarm Lock, Continental Instruments, and Marks USA. Headquartered in Amityville, New York, its products are installed by tens of thousands of security professionals worldwide in commercial, industrial, institutional, residential and government applications. NAPCO products have earned a reputation for innovation, technical excellence and reliability, positioning the Company for growth in the multi-billion dollar and rapidly expanding electronic security market. NAPCO’s senior management owns a large percent of equity in the Company, therefore our interests are aligned with our shareholders.
Financial overview of NAPCO's latest earnings report
The numbers we are interested in (for the quarter):
- Sales: $29.584 million (up from $27.260 million for the same quarter of the previous year)
- Cost of sales: $16.653 million ($15,122 million for the same quarter of the previous year)
- Net income: $4.728 million ($ 3.697 million for the same quarter of the previous year)
- Net income per share: $0.26 (up from $0.20 for the same quarter of the previous year)
- Diluted number of shares in issue: 18,534,000 (down from 18,764,000 for the same quarter of the previous year)
- Cash generated from operations for the quarter (estimated): $3.055 million
- Cash generated from operations per share: $0.16
- Cash generated from operations per share: $0.16
- Cash and cash equivalents: $8.028 million
- Cash and cash equivalents per share: $0.43
- Cash and cash equivalents makes up 1.2% of the group's current market capital
- Cash and cash equivalents makes up 9.3% of the group's total assets
- Cash and cash equivalents per share: $0.43
- Accounts receivable, net of allowance: $25.970 million
- Accounts receivable makes up 30.2% of the group's total assets
- Accounts receivable makes up 30.2% of the group's total assets
- Inventories: $29.576 million
- Inventories makes up 34.4% of the group's total assets
- Stockholders equity: $71.172 million
- Stockholders equity per share: $3.84
- Stockholders equity per share: $3.84
NAPCO''s management commentary on the results and earnings guidance
AMITYVILLE, N.Y., Sept. 3, 2019 /PRNewswire/ -- NAPCO Security Technologies, Inc. (NasdaqGS: NSSC), one of the world's leading solutions providers and manufacturers of high tech electronic intrusion security, school safety lock down systems, Internet of Things (IoT) connected home, video and fire systems, as well as enterprise-class access control and door locking products, today announced financial results for its fourth quarter and fiscal year ended June 30, 2019.
Richard Soloway, Chairman and President stated, "Fiscal 2019 saw NAPCO reaching new heights in both sales and profitability. I am particularly pleased with our Company continuing its uninterrupted string of 20 consecutive quarters of year-over-year record sales levels, as well as surpassing the $100M annual sales mark and generating net income of over $12 million. Recurring service revenue remained on a solid growth track, reaching a $20.4 million annual run rate, based on our June 2019 levels. We are confident that the market sectors that we have entered and compete well in, provide us with promising, aggressive growth opportunities for the future. Our investments in engineering and marketing innovative, high performing product solutions, in high growth markets, have fueled our sales growth and should provide for vibrant sales growth going forward.
During Q4, we began the launch of our new AT&T LTE StarLink® line of universal fire, intrusion alarm and IoT communicators. Providing extensive StarLink lines on both the Verizon LTE and AT&T LTE networks, enables us to provide our dealers and the marketplace, with the largest LTE service coverage area in the industry. This expansion of the StarLink footprint and product line enables us to market the most extensive and complete line of alarm communication solutions in the industry and should provide us with continued increases in market share of the Wireless Cellular Alarm Communicator Category. This past fiscal year recurring service revenue, propelled by the StarLink line, increased a solid 45%.
The award-winning StarLink Connect® solution, our IoT communicator, continued to exhibit solid sales growth in fiscal 2019 and contribute to our recurring service revenue growth. StarLink Connect enables dealers to generate incremental RSR with new installations and upgrading the estimated 16 million legacy regular alarm systems to offer our iBridge® connected home/business services, giving end-user customers the ability to use an app to remotely operate their security systems, lighting, locks, thermostats, and video cameras, from any smart device.
Launched this past year, and an additional RSR-generating product by NAPCO, our breakthrough, innovative FireLink®, all-in-one, 8-32 zone fire alarm control panel with built-in cellular LTE, StarLink-powered alarm communicator, has grown quickly in sales. The unique FireLink solution, comes pre-configured with an integrated and pre-activated cellular communicator, saving considerable installation time and money for the dealer doing new installations as well as replacing an aging landline-connected fire panel."
Mr. Soloway continued, "NAPCO is proud to have played a leadership role this past year, in helping to improve school safety and security levels at K-12 schools, universities and colleges, across the U.S. We continue to train record numbers of security dealers, integrators and school personnel on our proprietary School Access-control Vulnerability Index ("SAVI") and Audit System, which quantitatively measures a school's total security level. The index highlights deficiencies in the school's preparedness level and creates an action plan so that weaknesses can be addressed. There has been a considerable increase in demand for our Company's advanced, integrated line of education-focused security solutions, including our wireless locking and access control solutions, marketed by our Alarm Lock, Marks and Continental Access Control Divisions and NAPCO's high-technology alarm and communication systems.
NAPCO's integrated, wireless access control solutions, joining together our Continental Division's enterprise-class access control systems with our Alarm Lock Division's ArchiTech™ and Networx Series wireless access control locks, experienced sales growth this past fiscal year. Our Company's unique integration of labor-saving, cost-effective access locking products into even the largest, most demanding end-user applications, allows us to greatly expand the amount of affordable access control points to protect any public buildings or facilities."
Mr. Soloway concluded, "We are gratified by the progress we have seen this past year and are confident that our investments in the engineering and marketing of unique, innovative products, positioned in high-sales-growth markets, with an emphasis on driving strong RSR growth for our Company, should drive us to strong sales and profit growth, for the foreseeable future. Having built a strong foundation for growth, we look forward to continued success in the coming 2020 fiscal year."
Richard Soloway, Chairman and President stated, "Fiscal 2019 saw NAPCO reaching new heights in both sales and profitability. I am particularly pleased with our Company continuing its uninterrupted string of 20 consecutive quarters of year-over-year record sales levels, as well as surpassing the $100M annual sales mark and generating net income of over $12 million. Recurring service revenue remained on a solid growth track, reaching a $20.4 million annual run rate, based on our June 2019 levels. We are confident that the market sectors that we have entered and compete well in, provide us with promising, aggressive growth opportunities for the future. Our investments in engineering and marketing innovative, high performing product solutions, in high growth markets, have fueled our sales growth and should provide for vibrant sales growth going forward.
During Q4, we began the launch of our new AT&T LTE StarLink® line of universal fire, intrusion alarm and IoT communicators. Providing extensive StarLink lines on both the Verizon LTE and AT&T LTE networks, enables us to provide our dealers and the marketplace, with the largest LTE service coverage area in the industry. This expansion of the StarLink footprint and product line enables us to market the most extensive and complete line of alarm communication solutions in the industry and should provide us with continued increases in market share of the Wireless Cellular Alarm Communicator Category. This past fiscal year recurring service revenue, propelled by the StarLink line, increased a solid 45%.
The award-winning StarLink Connect® solution, our IoT communicator, continued to exhibit solid sales growth in fiscal 2019 and contribute to our recurring service revenue growth. StarLink Connect enables dealers to generate incremental RSR with new installations and upgrading the estimated 16 million legacy regular alarm systems to offer our iBridge® connected home/business services, giving end-user customers the ability to use an app to remotely operate their security systems, lighting, locks, thermostats, and video cameras, from any smart device.
Launched this past year, and an additional RSR-generating product by NAPCO, our breakthrough, innovative FireLink®, all-in-one, 8-32 zone fire alarm control panel with built-in cellular LTE, StarLink-powered alarm communicator, has grown quickly in sales. The unique FireLink solution, comes pre-configured with an integrated and pre-activated cellular communicator, saving considerable installation time and money for the dealer doing new installations as well as replacing an aging landline-connected fire panel."
Mr. Soloway continued, "NAPCO is proud to have played a leadership role this past year, in helping to improve school safety and security levels at K-12 schools, universities and colleges, across the U.S. We continue to train record numbers of security dealers, integrators and school personnel on our proprietary School Access-control Vulnerability Index ("SAVI") and Audit System, which quantitatively measures a school's total security level. The index highlights deficiencies in the school's preparedness level and creates an action plan so that weaknesses can be addressed. There has been a considerable increase in demand for our Company's advanced, integrated line of education-focused security solutions, including our wireless locking and access control solutions, marketed by our Alarm Lock, Marks and Continental Access Control Divisions and NAPCO's high-technology alarm and communication systems.
NAPCO's integrated, wireless access control solutions, joining together our Continental Division's enterprise-class access control systems with our Alarm Lock Division's ArchiTech™ and Networx Series wireless access control locks, experienced sales growth this past fiscal year. Our Company's unique integration of labor-saving, cost-effective access locking products into even the largest, most demanding end-user applications, allows us to greatly expand the amount of affordable access control points to protect any public buildings or facilities."
Mr. Soloway concluded, "We are gratified by the progress we have seen this past year and are confident that our investments in the engineering and marketing of unique, innovative products, positioned in high-sales-growth markets, with an emphasis on driving strong RSR growth for our Company, should drive us to strong sales and profit growth, for the foreseeable future. Having built a strong foundation for growth, we look forward to continued success in the coming 2020 fiscal year."
NAPCO (NASDAQ: NSSC) stock price history
The image below shows the stock price history of NAPCO for the last 5 years. And the stock has seen a significant surge since the start of 2019. 5 years ago the stock was trading at $49.97 and currently its trading at well above $30 a share. That's a return of 591% over the last 5 years. That is extraordinary growth. And the bulk of this growth has taken place in 2019 alone. It has gone up by over 100% since January 2019. So the question is whether there is still value in this stock, or has it run hot and is it due a significant pull back?
NAPCO (NASDAQ: NSSC) latest stock valuation
Based on the group's latest earnings report released earlier today we have a target price on NAPCO's stock of $20.75 per share. We therefore believe the group's stock is overvalued and do not currently offer long term fundamental investors a good entry point into the stock, We expect to see the group's stock pull back from its current levels in coming weeks.