NAPCO Security Technology (NSSC) is one of the world’s leading solutions providers and manufacturers of high technology electronic security, explains small cap expert Tom Bishop, editor of BI Research.

The firm's products include door locking systems, access control, home alarm/detection systems to detect intrusion, fire, temperature or glass breakage, and other IOT connected home products.

The shares are up 49% so far this year. NAPCO shares leaped 10% on the March quarter release (their fiscal Q3), and have moved higher from there, now nearly doubling since first recommended in September. EPS soared 71% to $0.17 which was also 42% above the consensus, and investors are rewarding that strong performance.

Revenue increased 13% to $25 million, also trouncing estimates by 10%, but within that, recurring (high margined) revenues increased 44% to $4.5 million (and recurring revenue is now up to a $19 million run rate, and climbing).

Moreover their products and especially new product line-up are drawing strong distributor interest and praise. In particular its new iSecure won the MVP award in a home controls category at the ISC West trade show attended by tens of thousands of dealers (the largest security trade show in the U.S.).

Other product introductions that were well received at the show included its Video Doorbell (something that dealers have actually been asking NAPCO for) and its FireLink and Fire Alarm Control. The panel has a built-in cellular communicator inside.

So NAPCO, which has no debt, continues to knock the cover off the ball with a great product line-up, and don’t forget all the school security products and emphasis in that area due to all the school, and places of worship shootings.

The P/E multiple is getting up there as all the good news has turned this into somewhat of high price/earnings to momentum play, but our BI Rank buy rating has not been damaged one bit given these excellent, estimate-beating results.

While the P/E on the fiscal year ending 6/19, the earnings per share consensus of $0.66 is about 40, the forward P/E is more like 29, which seems justified given forecasted 2019 EPS growth of 38%. As a result, NSSC remains a "Buy".

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