Buffett Brain · Research note
Score updated 26 Sept 2026 · analysis from 4 Jun 2026
NSSC· Industrials
Napco Security Technologies
Napco Security Technologies shows strong profitability metrics but a high valuation raises concerns about future returns.
Buffett fit
Partial fit
Owner
67
Durability
84
Management
91
Price
8
Score updated 26 Sept 2026 · analysis from 4 Jun 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Industrials stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If I owned Napco Security, I would focus on maintaining its high of 18.4% and ensuring continued EPS growth of 22.67%.
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Napco's business model is solid, with a 5-year EPS CAGR of 22.67% and profitability maintained throughout the past five years.
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Management has shown discipline with a share count CAGR of -0.29% and a yield of 0.51%, indicating a commitment to returning value to shareholders.
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The current yield of 3.58% is below my threshold of 8-10%, indicating that the stock is overvalued at $35.99.
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
5- 1 of 18.4% exceeds the sector top-quintile cutoff of 11.5%, indicating strong capital efficiency.
- 25-year average of 19.6% suggests consistent performance and durability.
- 3 of 57% is well above the sector top-quintile cutoff of 43.5%.
- 4 of 19.9% ranks in the top quintile for the sector, demonstrating effective cost management.
Concerns
5- 1 ratio of 38.9 suggests the market is pricing in high growth expectations, which may not materialize.
- 2 yield of 3.58% is below the preferred threshold of 8-10%, indicating potential overvaluation.
- 3Interest coverage ratio of 0.0 raises concerns about debt management, despite low debt levels.
- 4Current ratio of 4.95, while strong, indicates potential inefficiencies in asset management.
Price history
$39.66+65.4%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Napco Security develops and sells security products across various sectors, generating $181.62M in revenue with a net income of $43.41M. Their product range includes access control systems and video surveillance equipment. The business benefits from a diversified customer base, primarily independent distributors and installers. This model ensures steady cash flow, supported by a healthy of 57%.
How this analysis has moved
The call has held across 6 reviews.
Sep 27, 2026 → Oct 29, 2026
What other investors would say
The same company, judged by three other documented playbooks.
Keep researching
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Questions about Napco Security Technologies
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