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A Look At Napco Security Technologies (NSSC) Valuation As Growth And Cash Generation Draw Investor Focus

Simply Wall St · 2d ago

Recent attention on Napco Security Technologies (NSSC) centers on its 10.2% annual revenue growth and 12.8% annual net income growth, along with solid free cash flow and higher returns on capital that highlight management’s capital allocation.

See our latest analysis for Napco Security Technologies.

Even with recent choppy trading, including a 4.2% decline in the 90 day share price return and a 1 year total shareholder return of 19%, momentum still looks more supportive over the longer term than in the very short term as investors weigh growth, valuation signals and shifting risk appetite.

If Napco’s performance has you thinking about where else growth and quality might line up, it could be a good moment to broaden your search with fast growing stocks with high insider ownership.

With Napco Security Technologies growing revenue and net income at double digit annual rates, and the shares returning 52% over 3 years and more than 2x over 5 years, is there still a buying opportunity here, or has the market already priced in future growth?

Most Popular Narrative: 15.8% Undervalued

With a fair value estimate of about $48.83 versus the last close at $41.10, the most followed narrative sees meaningful upside built on recurring revenue and margin strength.

Persistent growth in high-margin, recurring monthly service revenue, driven by increased deployments of StarLink fire radios and the expected ramp-up of new cloud-based platforms like MVP, positions Napco to expand margins and achieve more stable, predictable earnings over the long term.

Read the complete narrative.

Curious what kind of revenue mix, margin profile, and earnings trajectory underpin that valuation gap? The narrative leans on specific growth, profitability and future P/E assumptions that are anything but conservative.

Result: Fair Value of $48.83 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, there are still some pressure points, including weaker hardware profitability and heavy reliance on StarLink Fire recurring revenue. These factors could quickly challenge this upbeat story.

Find out about the key risks to this Napco Security Technologies narrative.

Another View: SWS DCF Flags Overvaluation Risk

That 15.8% upside story sits uncomfortably alongside the SWS DCF model, which puts fair value at about $31.96 per share versus the current $41.10. On that math, the shares look expensive. This raises a simple question for you: are the cash flow assumptions too cautious, or is the optimism too rich?

Look into how the SWS DCF model arrives at its fair value.

NSSC Discounted Cash Flow as at Jan 2026
NSSC Discounted Cash Flow as at Jan 2026

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Napco Security Technologies for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 884 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Napco Security Technologies Narrative

If you interpret the numbers differently or prefer to test your own assumptions, you can build a custom Napco view in minutes with Do it your way.

A great starting point for your Napco Security Technologies research is our analysis highlighting 1 key reward and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.