What happened
Napco Security Technologies (NASDAQ: NSSC) delivered quarterly earnings that came in well above expectations and initiated a dividend. Investors are buying in, sending shares up as much as 19% on Monday morning.
So what
Napco is a maker of high-tech electronic security products including automated locks and access equipment. The company earned $0.29 per share in its fiscal third quarter (ending March 31) on revenue of $43.5 million, topping analyst expectations for $0.19 per share in earnings on sales of $42 million.
Net sales increased 21% year over year, and recurring service revenue in the quarter was up 26%.
“The strong sales and profitability generated during the first two quarters of fiscal 2023 continued during the third quarter,” CEO Richard Soloway said.
Gross margin also improved year over year, which Soloway attributed to “lower freight costs, increased overhead absorption from our Dominican Republic factory, which occurred as a result of the large equipment sales increase, and a more favorable sales mix.”
Napco also announced the initiation of a quarterly dividend program, with a first dividend of $0.0625 per share payable on June 12 for shareholders of record as of May 22.
Now what
Napco isn’t an often-discussed stock, but the company’s shares are now up more than 400% over the past five years. The dividend initiation is likely to get it on a lot of new radar screens, potentially creating new demand for the shares.
That would be a nice boost, but the important thing for long-term investors is that the business appears to be performing well.
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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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