The shares sold off after disappointing hardware sales in Q2, but the worries seem very overdone to us.
The company's biggest distributor is running down inventory, as it's in the process of being acquired. This will reverse in the quarters to come.
Meanwhile, the rapid rise in recurring revenue continues unabated, as does the associated leverage.
The shares in Napco Security Technologies (NSSC) sold off on bad hardware number in Q2, but this very much looks like a one-off, caused by some mishap at its biggest distributor.