Breaking up Napco Sec (NASDAQ:NSSC) risk factors?

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Given the investment horizon of 90 days Napco Sec is expected to under-perform the market. In addition to that, the company is 1.59 times more volatile than its market benchmark. It trades about -0.11 of its total potential returns per unit of risk. The DOW is currently generating roughly -0.07 per unit of volatility. Since many greedy investors are excited about industrials space, let's go over Napco Sec against its current volatility. We will analyze why it could be a different year for Napco Sec shareholders. Napco Sec's low volatility may still impact the value of the stock as we estimate it as currently undervalued. The real value, based on our analysis, is getting close to 19.11 per share.

Published over a year ago

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Reviewed by Ellen Johnson

This firm conducts business under Industrials sector and is part of Security & Protection Services industry.

Breaking up Napco Sec (NASDAQ:NSSC) risk factors?

Volatility is a rate at which the price of NAPCO Security or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of NAPCO Security may increase or decrease. In other words, similar to NAPCO's beta indicator, it measures the risk of NAPCO Security and helps estimate the fluctuations that may happen in a short period of time. So if prices of NAPCO Security fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility. Please read more on our technical analysis page.

How important is NAPCO Security's Liquidity

NAPCO Security financial leverage refers to using borrowed capital as a funding source to finance NAPCO Security Technologies ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. NAPCO Security financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to NAPCO Security's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of NAPCO Security's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between NAPCO Security's total debt and its cash.

NAPCO Security Gross Profit

NAPCO Security Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing NAPCO Security previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show NAPCO Security Gross Profit growth over the last 10 years. Please check NAPCO Security's gross profit and other fundamental indicators for more details.

NAPCO Security Volatility Drivers

NAPCO Security unsystematic risk is unique to NAPCO Security Techn and usually not directly affected by the market or economic environment. An example of unsystematic risk is the possibility of poor earnings or a layoff due to coronavirus. One may mitigate nonsystematic risk by buying different securities in the same industry or by buying in different sectors. For example, if you have a position in NAPCO Security you can also buy First Advantage Corp. You can also mitigate this risk by investing in the information technology sector as well as in companies having nothing to do with it. This type of risk is also called diversifiable risk and can be understood from analyzing NAPCO Security important indicators over time. Here we run a correlation analysis between relevant fundamental ratios over at least ten year period to find a relationship in the way they react to changes in NAPCO Security income statement and balance sheet. Here are more details about NAPCO volatility.

	Total Assets	Net Debt	Total Liab	Common Stock	Capital Stock	Total Revenue	Gross Profit	Net Income	Tax Provision	Ptb Ratio	Pb Ratio	Ev To Sales	Payout Ratio	Pfcf Ratio	Pe Ratio	Current Ratio	Graham Number	Ebt Per Ebit	Quick Ratio	Cash Ratio	Debt Ratio	Market Cap
Total Assets		-0.86	0.7	0.95	0.82	0.99	0.99	0.97	0.96	0.81	0.81	0.9	-0.89	0.3	0.74	-0.06	0.97	-0.05	0.62	0.74	-0.71	0.27
Net Debt	-0.86		-0.52	-0.77	-0.78	-0.83	-0.88	-0.88	-0.86	-0.92	-0.92	-0.93	0.9	-0.36	-0.7	-0.09	-0.93	-0.37	-0.68	-0.87	0.81	-0.05
Total Liab	0.7	-0.52		0.62	0.58	0.62	0.59	0.56	0.58	0.39	0.39	0.52	-0.68	0.15	0.59	-0.14	0.6	0.0	0.17	0.49	-0.25	0.44
Common Stock	0.95	-0.77	0.62		0.89	0.96	0.93	0.94	0.88	0.69	0.69	0.78	-0.82	0.32	0.56	-0.06	0.91	-0.08	0.59	0.62	-0.67	0.23
Capital Stock	0.82	-0.78	0.58	0.89		0.82	0.81	0.85	0.79	0.7	0.7	0.74	-0.81	0.27	0.45	0.3	0.84	0.18	0.65	0.69	-0.58	-0.01
Total Revenue	0.99	-0.83	0.62	0.96	0.82		0.99	0.98	0.95	0.78	0.78	0.87	-0.84	0.33	0.7	-0.06	0.96	-0.07	0.61	0.67	-0.74	0.29
Gross Profit	0.99	-0.88	0.59	0.93	0.81	0.99		0.99	0.97	0.86	0.86	0.93	-0.86	0.3	0.74	-0.02	0.98	-0.02	0.67	0.74	-0.75	0.21
Net Income	0.97	-0.88	0.56	0.94	0.85	0.98	0.99		0.97	0.87	0.87	0.93	-0.89	0.27	0.67	0.01	0.98	-0.03	0.73	0.77	-0.73	0.12
Tax Provision	0.96	-0.86	0.58	0.88	0.79	0.95	0.97	0.97		0.89	0.89	0.95	-0.86	0.22	0.76	0.05	0.95	-0.07	0.77	0.83	-0.69	0.06
Ptb Ratio	0.81	-0.92	0.39	0.69	0.7	0.78	0.86	0.87	0.89		1.0	0.98	-0.82	0.19	0.73	0.15	0.89	0.18	0.82	0.91	-0.66	-0.15
Pb Ratio	0.81	-0.92	0.39	0.69	0.7	0.78	0.86	0.87	0.89	1.0		0.98	-0.82	0.19	0.73	0.15	0.89	0.18	0.82	0.91	-0.66	-0.15
Ev To Sales	0.9	-0.93	0.52	0.78	0.74	0.87	0.93	0.93	0.95	0.98	0.98		-0.87	0.23	0.79	0.11	0.95	0.13	0.78	0.89	-0.7	0.01
Payout Ratio	-0.89	0.9	-0.68	-0.82	-0.81	-0.84	-0.86	-0.89	-0.86	-0.82	-0.82	-0.87		-0.2	-0.57	-0.03	-0.91	-0.11	-0.71	-0.87	0.63	-0.06
Pfcf Ratio	0.3	-0.36	0.15	0.32	0.27	0.33	0.3	0.27	0.22	0.19	0.19	0.23	-0.2		0.31	-0.14	0.32	0.36	-0.12	0.04	-0.59	0.34
Pe Ratio	0.74	-0.7	0.59	0.56	0.45	0.7	0.74	0.67	0.76	0.73	0.73	0.79	-0.57	0.31		0.02	0.73	0.16	0.4	0.62	-0.57	0.33
Current Ratio	-0.06	-0.09	-0.14	-0.06	0.3	-0.06	-0.02	0.01	0.05	0.15	0.15	0.11	-0.03	-0.14	0.02		0.06	0.38	0.35	0.17	-0.03	-0.25
Graham Number	0.97	-0.93	0.6	0.91	0.84	0.96	0.98	0.98	0.95	0.89	0.89	0.95	-0.91	0.32	0.73	0.06		0.11	0.69	0.79	-0.78	0.2
Ebt Per Ebit	-0.05	-0.37	0.0	-0.08	0.18	-0.07	-0.02	-0.03	-0.07	0.18	0.18	0.13	-0.11	0.36	0.16	0.38	0.11		-0.1	0.15	-0.41	0.03
Quick Ratio	0.62	-0.68	0.17	0.59	0.65	0.61	0.67	0.73	0.77	0.82	0.82	0.78	-0.71	-0.12	0.4	0.35	0.69	-0.1		0.86	-0.4	-0.46
Cash Ratio	0.74	-0.87	0.49	0.62	0.69	0.67	0.74	0.77	0.83	0.91	0.91	0.89	-0.87	0.04	0.62	0.17	0.79	0.15	0.86		-0.52	-0.3
Debt Ratio	-0.71	0.81	-0.25	-0.67	-0.58	-0.74	-0.75	-0.73	-0.69	-0.66	-0.66	-0.7	0.63	-0.59	-0.57	-0.03	-0.78	-0.41	-0.4	-0.52		-0.27
Market Cap	0.27	-0.05	0.44	0.23	-0.01	0.29	0.21	0.12	0.06	-0.15	-0.15	0.01	-0.06	0.34	0.33	-0.25	0.2	0.03	-0.46	-0.3	-0.27

Click cells to compare fundamentals

Another Deeper Perspective

The company reported the previous year's revenue of 128.12 M. Net Income was 18.17 M with profit before overhead, payroll, taxes, and interest of 50.15 M.

Napco Sec has 99 percent chance to stay above $16.88 in 2 months

Current coefficient of variation is at -745.18. Napco Sec Tech exhibits very low volatility with skewness of -0.32 and kurtosis of -0.37. However, we advise investors to further study Napco Sec Tech technical indicators to make sure all market info is available and is reliable. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Napco Sec's stock risk against market volatility during both bullying and bearish trends. The higher level of volatility that comes with bear markets can directly impact Napco Sec's stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different stocks as prices fall.

Napco Sec Implied Volatility

Napco Sec's implied volatility exposes the market's sentiment of Napco Sec Tech stock's possible movements over time. However, it does not forecast the overall direction of its price. In a nutshell, if Napco Sec's implied volatility is high, the market thinks the stock has potential for high price swings in either direction. On the other hand, the low implied volatility suggests that Napco Sec stock will not fluctuate a lot when Napco Sec's options are near their expiration.

Our Final Takeaway

Whereas many of the other players in the security & protection services industry are either recovering or due for a correction, Napco Sec may not be performing as strong as the other in terms of long-term growth potentials. While some investors may not share our view we believe that the current risk-reward utility is not appealing enough to do any trading. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to Napco Sec.

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Editorial Staff

Vlad Skutelnik is a Macroaxis Contributor. Vlad covers stocks, funds, cryptocurrencies, and ETFs that are traded in North America, focusing primarily on fundamentals, valuation and market volatility. He has many years of experience in fintech, predictive investment analytics, and risk management. View Profile

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Vlad Skutelnik do not own shares of NAPCO Security Technologies. Please refer to our Terms of Use for any information regarding our disclosure principles.

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