Comparing NAPCO Security Technologies (NASDAQ:NSSC) & Eastern (NASDAQ:EML)

Eastern (NASDAQ:EML) and NAPCO Security Technologies (NASDAQ:NSSC) are both small-cap industrials companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, risk, institutional ownership, profitability, analyst recommendations, valuation and dividends.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Eastern	2.96%	7.18%	3.84%
NAPCO Security Technologies	24.70%	27.45%	23.48%

Analyst Recommendations

This is a summary of current recommendations and price targets for Eastern and NAPCO Security Technologies, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Eastern	0	1	0	0	2.00
NAPCO Security Technologies	0	2	6	0	2.75

NAPCO Security Technologies has a consensus price target of $47.83, indicating a potential upside of 12.48%. Given NAPCO Security Technologies’ stronger consensus rating and higher probable upside, analysts plainly believe NAPCO Security Technologies is more favorable than Eastern.

Dividends

Eastern pays an annual dividend of $0.44 per share and has a dividend yield of 2.3%. NAPCO Security Technologies pays an annual dividend of $0.56 per share and has a dividend yield of 1.3%. Eastern pays out 35.5% of its earnings in the form of a dividend. NAPCO Security Technologies pays out 42.1% 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. NAPCO Security Technologies has increased its dividend for 2 consecutive years. Eastern is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares Eastern and NAPCO Security Technologies”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Eastern	$272.75 million	0.43	-$8.53 million	$1.24	15.48
NAPCO Security Technologies	$181.62 million	8.35	$43.41 million	$1.33	31.97

NAPCO Security Technologies has lower revenue, but higher earnings than Eastern. Eastern 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

Eastern has a beta of 0.98, indicating that its stock price is 2% less volatile than the S&P 500. Comparatively, NAPCO Security Technologies has a beta of 1.51, indicating that its stock price is 51% more volatile than the S&P 500.

Insider & Institutional Ownership

77.0% of Eastern shares are held by institutional investors. Comparatively, 85.1% of NAPCO Security Technologies shares are held by institutional investors. 17.0% of Eastern 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 large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

NAPCO Security Technologies beats Eastern on 13 of the 17 factors compared between the two stocks.

About Eastern

The Eastern Company designs, manufactures, and sells engineered solutions to industrial markets in the United States and internationally. The company offers turnkey returnable packaging solutions, which are used in the assembly processes of vehicles, aircraft, and durable goods, as well as in production processes of plastic packaging products, packaged consumer goods, and pharmaceuticals; designs and manufactures blow mold tools and injection blow mold tooling products, and 2-step stretch blow molds and related components for the stretch blow molding industry; and supplies blow molds and change parts to the food, beverage, healthcare, and chemical industries. It also provides rotary latches, compression latches, draw latches, hinges, camlocks, key switches, padlocks, and handles; and development and program management services for custom electromechanical and mechanical systems for original equipment manufacturers (OEMs) and customer applications. In addition, the company designs and manufactures proprietary vision technology for OEMs and aftermarket applications, as well as offers aftermarket components to the heavy- and medium-duty truck, motorhome, and bus markets. The Eastern Company was founded in 1858 and is based in Shelton, Connecticut.

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.