NAPCO Security Technologies (NASDAQ: NSSC) and Digital Ally (NASDAQ:DGLY) are both small-cap industrial products companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, earnings, institutional ownership, risk, dividends, analyst recommendations and profitability.

Insider & Institutional Ownership

25.1% of NAPCO Security Technologies shares are owned by institutional investors. Comparatively, 6.6% of Digital Ally shares are owned by institutional investors. 37.8% of NAPCO Security Technologies shares are owned by company insiders. Comparatively, 19.0% of Digital Ally shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations for NAPCO Security Technologies and Digital Ally, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NAPCO Security Technologies 0 1 2 0 2.67
Digital Ally 0 0 2 0 3.00

NAPCO Security Technologies presently has a consensus target price of $8.75, indicating a potential upside of 1.16%. Digital Ally has a consensus target price of $10.00, indicating a potential upside of 227.87%. Given Digital Ally’s stronger consensus rating and higher probable upside, analysts plainly believe Digital Ally is more favorable than NAPCO Security Technologies.

Profitability

This table compares NAPCO Security Technologies and Digital Ally’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NAPCO Security Technologies 6.78% 11.09% 8.98%
Digital Ally -71.44% -115.56% -63.11%

Valuation & Earnings

This table compares NAPCO Security Technologies and Digital Ally’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
NAPCO Security Technologies $85.75 million 1.90 $8.06 million $0.31 27.90
Digital Ally $17.40 million 1.00 -$11.37 million ($2.31) -1.32

NAPCO Security Technologies has higher revenue and earnings than Digital Ally. Digital Ally is trading at a lower price-to-earnings ratio than NAPCO Security Technologies, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

NAPCO Security Technologies has a beta of 0.52, indicating that its share price is 48% less volatile than the S&P 500. Comparatively, Digital Ally has a beta of 3.16, indicating that its share price is 216% more volatile than the S&P 500.

Summary

NAPCO Security Technologies beats Digital Ally on 9 of the 12 factors compared between the two stocks.

NAPCO Security Technologies Company Profile

NAPCO Security Technologies, Inc. is a manufacturer of security products, encompassing access control systems, door-locking products, intrusion and fire alarm systems and video surveillance products. These products are used for commercial, residential, institutional, industrial and governmental applications, and are sold across the world principally to independent distributors, dealers and installers of security equipment. The Company manufactures and markets various products for alarm systems, which include automatic communicators, control panels, combination control panels/digital communicators and digital keypad systems, fire alarm control panel and area detectors. It manufactures a range of door locking devices, including microprocessor-based electronic door locks with push button, card reader and bio-metric operation, door alarms, mechanical door locks and simple dead bolt locks. It also markets peripheral and related equipment manufactured by other companies.

Digital Ally Company Profile

Digital Ally, Inc. produces digital video imaging and storage products for use in law enforcement, security and commercial applications. The Company’s products include in-car digital video/audio recorder contained in a rear-view mirror for use in law enforcement and commercial fleets; a system that provides its law enforcement customers with audio/video surveillance from multiple vantage points and hands-free automatic activation of body-worn cameras and in-car video systems; a weather-resistant mobile digital video recording system for use on motorcycles, all-terrain vehicles (ATVs) and boats; a miniature digital video system designed to be worn on an individual’s body, and a hand-held laser speed detection device that it offers primarily to law enforcement agencies. The Company sells its products to law enforcement agencies and other security organizations, consumer and commercial fleet operators through direct sales domestically and third-party distributors internationally.

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