NSSC
Napco Security Technologies, Inc.
$37.41
Platform & Compounding FCF
65%
Two-stage FCF DCF
Strong
·
Conviction
Undervalued
Trading 47.0% below fair value
You pay
$37.41
Bear
$36.20
Fair
$70.57
Bull
$117.38
Bear
$36.20
-3.2%
14% stage 1 growth, 12% discount
Fair
$70.57
+88.6%
24% stage 1 growth, 12% discount
Bull
$117.38
+213.8%
31% stage 1 growth, 12% discount
Key Value Driver
FCF growth rate (24% base case)
Terminal Value % of EV
44%
Implied Market Multiple
24.7x
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $49.00 from 11 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $70.57 per share.
Warnings
Wall Street's average price target is $49.00 (from 11 analysts). Our estimate is 55% above the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions