Why Napco Security Technologies Stock Plummeted Today

Napco Security Technologies (NASDAQ: NSSC) stock sank in Monday's trading. The security-solution company's share price closed out the daily session down 15.2%.

Napco published its fiscal third-quarter results before the market opened this morning and reported better-than-expected earnings on revenue that was in line with the market's expectations. Fiscal Q3 ended March 31 for the company. Despite the big pullback today, the stock is still up roughly 67% over the last year.

Napco's earnings beat wasn't enough to excite investors

With the fiscal Q3 release it published this morning, Napco reported non-GAAP (adjusted) earnings of $0.39 per share on sales of $49.2 million. Sales were up roughly 11.8% year over year and in line with the average analyst estimate, and adjusted earnings per share beat the average forecast by $0.05.

What's next for Napco?

Napco's Q3 results didn't look terrible, and today's sell-off may have seen litigation settlements and broader valuation concerns play bigger roles in shaping valuation moves. Some aspects of the Q3 report actually looked promising. The company closed out the period with recurring service revenue (RSR) of $24.9 million -- up 15.4% year over year. The RSR category also delivered a gross margin of 90.4%, which suggests that it could be a strong earnings driver if it continues to scale.

Keith Noonan 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.