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NAPCO (NSSC) to Report Q4 Earnings: What's in the Offing?

Zacks Equity Research

NAPCO Security Technologies, Inc. NSSC is scheduled to report fourth-quarter fiscal 2019 (ended Jun 30, 2019) results on Sep 3, before the opening bell.

The company delivered average positive surprise of 71.03% in the trailing two quarters. Notably, NAPCO’s third-quarter fiscal 2019 adjusted earnings of 17 cents per share surpassed the Zacks Consensus Estimate of 11 cents by 54.55%.

In the past three months, shares of the company have rallied 26.3% against the industry’s 0.8% decline.

Let’s see how things are shaping up for this announcement.

Factors to Influence Q4 Results

NAPCO’s upcoming results are expected to reflect benefits from its incremental investments for new products development and channel initiatives. Also, robust demand for alarm communication products, including intrusion alarm communicators and fire alarm control panels, along with growing adoption for the smart home category of products are likely to drive the company’s top-line performance.

Moreover, NAPCO expects robust pipeline for school security projects on account of increased funding from the U.S. federal government to bolster fiscal fourth-quarter revenues. Also, favorable commercial and residential markets will drive the top line of the company. In addition, its focus on improving operational efficiency, along with its pricing actions will stoke growth.
Further, NAPCO has consistently returned capital to shareholders in the form of share repurchase. In first nine months of fiscal 2019 (ended Mar 31, 2019), the company repurchased shares worth approximately $4 million. Notably, in December 2018, the company authorized the repurchase of up to an extra 500,000 shares in addition to its existing repurchase program. Its focus on rewarding shareholders handsomely through share repurchase program will benefit fiscal fourth-quarter results.

However, the company is currently dealing with rising cost of sales. Also, NAPCO is experiencing hike in both equipment and service-related expenses. Also, high R&D costs could hurt its profitability. These are expected to be reflected in the upcoming results.

Earnings Whispers

Our proven model provides some idea on the stocks that are about to release their earnings results. Per the model, a stock needs to have a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or at least 3 (Hold) for a likely earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

That is not the case here as we will see below.

Earnings ESP: NAPCO has an Earnings ESP of 0.00%, as both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 25 cents.

NAPCO Security Technologies, Inc. Price and EPS Surprise

NAPCO Security Technologies, Inc. Price and EPS Surprise

NAPCO Security Technologies, Inc. price-eps-surprise | NAPCO Security Technologies, Inc. Quote

Zacks Rank: The company carries a Zacks Rank #3, which increases the predictive power of ESP. However, its ESP of 0.00% makes surprise prediction difficult.

It should be noted that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Key Picks

Here are some companies you may want to consider as our model shows that these have the right combination of elements to beat estimates this time:

ACCO Brands Corporation ACCO has an Earnings ESP of +3.18% and a Zacks Rank #2.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Tetra Tech, Inc. TTEK has an Earnings ESP of +2.57% and a Zacks Rank #2.

Stanley Black & Decker, Inc. SWK has an Earnings ESP of +3.67% and a Zacks Rank #3.

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