Critical Review: NAPCO Security Technologies (NASDAQ:NSSC) versus Brady (NYSE:BRC)

Brady (NYSE:BRC) and NAPCO Security Technologies (NASDAQ:NSSC) are both industrials companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, valuation, risk, earnings, dividends, analyst recommendations and institutional ownership.

Institutional and Insider Ownership

76.3% of Brady shares are held by institutional investors. Comparatively, 85.1% of NAPCO Security Technologies shares are held by institutional investors. 15.6% of Brady shares are held by company insiders. Comparatively, 5.7% of NAPCO Security Technologies shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings and target prices for Brady and NAPCO Security Technologies, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Brady	0	0	2	0	3.00
NAPCO Security Technologies	0	2	6	0	2.75

Brady currently has a consensus target price of $103.00, indicating a potential upside of 13.65%. NAPCO Security Technologies has a consensus target price of $48.67, indicating a potential upside of 34.72%. Given NAPCO Security Technologies’ higher probable upside, analysts clearly believe NAPCO Security Technologies is more favorable than Brady.

Risk and Volatility

Brady has a beta of 0.61, suggesting that its share price is 39% less volatile than the S&P 500. Comparatively, NAPCO Security Technologies has a beta of 1.44, suggesting that its share price is 44% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Brady	12.93%	19.01%	13.47%
NAPCO Security Technologies	18.70%	28.93%	24.39%

Valuation & Earnings

This table compares Brady and NAPCO Security Technologies”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Brady	$1.51 billion	2.82	$189.26 million	$4.39	20.64
NAPCO Security Technologies	$181.62 million	7.11	$43.41 million	$1.04	34.74

Brady has higher revenue and earnings than NAPCO Security Technologies. Brady 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.

Dividends

Brady pays an annual dividend of $0.98 per share and has a dividend yield of 1.1%. NAPCO Security Technologies pays an annual dividend of $0.60 per share and has a dividend yield of 1.7%. Brady pays out 22.3% of its earnings in the form of a dividend. NAPCO Security Technologies pays out 57.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Brady has raised its dividend for 39 consecutive years and NAPCO Security Technologies has raised its dividend for 2 consecutive years.

Summary

NAPCO Security Technologies beats Brady on 10 of the 17 factors compared between the two stocks.

About Brady

Brady Corporation manufactures and supplies identification solutions (IDS) and workplace safety (WPS) products to identify and protect premises, products, and people in the United States and internationally. The company offers materials, printing systems, RFID, and bar code scanners for product identification, brand protection labeling, work in process labeling, finished product identification, and industrial track and trace applications; safety signs, floor-marking tapes, pipe markers, labeling systems, spill control products, lockout/tagout device, and software and services for safety compliance auditing, procedure writing, and training; and hand-held printers, wire markers, sleeves, and tags for wire identification. It also provides name tags, badges, lanyards, rigid card printing systems, and access control software for people identification; and wristbands, labels, printing systems, and other products for tracking and improving the safety of patients. In addition, the company offers workplace safety, identification, and compliance products, such as safety and compliance signs, tags, labels, and markings; informational signage and markings; asset tracking labels; facility safety and personal protection equipment; first-aid products; and other compliance products for process, government, education, construction, and utilities industries. Further, it provides stock and custom identification products; and sells related resale products. The company serves industrial and electronic manufacturing, healthcare, chemical, oil, gas, automotive, aerospace, governments, mass transit, electrical contractors, education, leisure and entertainment, telecommunications, and other industries through distributors, direct sales force, and digital channels. Brady Corporation was incorporated in 1914 and is headquartered in Milwaukee, Wisconsin.

About NAPCO Security Technologies

Napco Security Technologies, Inc. develops, manufactures, and sells electronic security systems for commercial, residential, institutional, industrial, and governmental applications in the United States and internationally. Its access control systems include various types of identification readers, control panels, PC-based computers, and electronically activated door-locking devices; intrusion and fire alarm systems, consists of various detectors, a control panel, a digital keypad and signaling equipment; and door locking devices comprise microprocessor-based electronic door locks with push button, card readers and bio-metric operation, door alarms, mechanical door locks, and simple dead bolt locks. The company’s alarm systems include automatic communicators, cellular communication devices, control panels, combination control panels/digital communicators and digital keypad systems, fire alarm control panels, and area detectors; and video surveillance systems comprise video cameras, control panels, video monitors, or PCs. It also buys and resells various identification readers, video cameras, PC-based computers, and various peripheral equipment for access control and video surveillance systems; offers school security products; and markets peripheral and related equipment manufactured by other companies. The company markets and sells its products to independent distributors, dealers, and installers of security equipment. Napco Security Technologies, Inc. was founded in 1969 and is headquartered in Amityville, New York.