NL Industries, Inc. (NL) Stock Analysis

Why this analysis is different

• A sector-relative MoonshotScore — five pillars (business quality, financial safety, valuation, growth durability, momentum) re-ranked nightly against the full universe of US-listed common stocks.
• An AI Council read across up to eight perspectives — value, macro, quantitative, and momentum lenses — that shows where they disagree instead of averaging the tension away.
• Figures come straight from FMP and Yahoo Finance filings data. The AI writes the narrative around the numbers — it never edits the numbers.

NL Industries, Inc. (NL) Industrial Operations Profile

NL Industries, operating via CompX International, manufactures and distributes security components like locks and exhaust systems, alongside insurance services. With a history dating back to 1891, the company serves OEMs and distributors, balancing a niche product portfolio with a high dividend yield, within the industrials sector.

What Is the Investment Thesis for NL?

NL Industries presents a mixed investment profile. Its high dividend yield of 9.72% may attract income-focused investors. However, the company's negative profit margin of -21.5% raises concerns about its operational efficiency and profitability. The low beta of 0.16 suggests relatively low volatility compared to the broader market. Growth catalysts include potential expansion in the electronic lock market and increased demand for aftermarket exhaust components. Investors should closely monitor the company's ability to improve its profit margins and capitalize on growth opportunities within its niche markets. The company's established history and diverse product offerings provide a degree of stability, but financial performance needs improvement for long-term sustainability.

Based on FMP financials and quantitative analysis

NL Key Highlights

• Market capitalization of $280M reflects its small-cap status within the industrials sector.
• Gross margin of 31.1% indicates a moderate ability to control production costs.
• Dividend yield of 9.72% offers a substantial income stream for investors, but should be evaluated in the context of the company's financial health.
• Negative profit margin of -21.5% signals potential issues with profitability and operational efficiency.
• Beta of 0.16 suggests the stock is less volatile than the overall market.

Who Are NL's Competitors?

NL is benchmarked below against 8 industry peers on price, market cap, and our AI MoonshotScore.

AI Score by Stock Expert AI · Price data: FMP / Yahoo Finance

What Are NL's Key Strengths?

• Established brand reputation through CompX International.
• Diverse product portfolio catering to various applications.
• High dividend yield of 9.72%.
• Established distribution network.

What Are NL's Weaknesses?

• Negative profit margin of -21.5%.
• Reliance on niche markets.
• Small market capitalization.
• Subsidiary of Valhi, Inc., potentially limiting strategic autonomy.

What Could Drive NL Stock Higher?

• Potential new contracts with OEMs for electronic locking systems.
• Increasing demand for aftermarket automotive components.
• Expansion of distribution network in emerging markets.

What Are the Key Risks for NL?

• Negative return on equity (-9.2%) — the business is not currently generating profit on shareholder capital.
• Economic downturn affecting demand for security and automotive components.
• Increased competition from larger, more diversified manufacturers.
• Fluctuations in raw material prices.
• Changes in regulations affecting the security and automotive industries.

What Are the Growth Opportunities for NL?

• Expansion in Electronic Locking Systems: The market for electronic locks is growing due to increasing demand for advanced security solutions in both residential and commercial sectors. NL Industries, through CompX eLock and StealthLock, can capitalize on this trend by expanding its product offerings and targeting new applications, such as smart homes and IoT devices. This market is projected to reach $5 billion by 2028, offering significant growth potential.
• Increased Demand for Aftermarket Automotive Components: The market for aftermarket automotive components, particularly for performance and recreational vehicles, is driven by consumer preferences for customization and performance upgrades. NL Industries can leverage its existing product line of exhaust systems and accessories to capture a larger share of this market by focusing on product innovation and targeted marketing campaigns. The global automotive aftermarket size is expected to reach $550 billion by 2027.
• Strategic Partnerships with OEMs: Collaborating with original equipment manufacturers (OEMs) in the security and automotive industries can provide NL Industries with access to new markets and distribution channels. By developing customized solutions for OEMs, the company can secure long-term contracts and increase its revenue base. This strategy can be particularly effective in the electronic lock market, where OEMs are seeking integrated security solutions.
• Geographic Expansion into Emerging Markets: Expanding into emerging markets, such as Asia-Pacific and Latin America, can provide NL Industries with new growth opportunities. These markets are experiencing rapid economic growth and increasing demand for security and automotive components. The company can leverage its existing product portfolio and distribution network to establish a presence in these markets and capitalize on the growing demand.
• Development of Integrated Security Solutions: Integrating its mechanical and electronic locking systems with other security technologies, such as access control systems and surveillance cameras, can provide NL Industries with a competitive advantage. By offering comprehensive security solutions, the company can cater to the evolving needs of its customers and increase its market share. The integrated security solutions market is projected to grow at a CAGR of 8% over the next five years.

What Opportunities Does NL Have?

• Expansion in the electronic locking systems market.
• Increased demand for aftermarket automotive components.
• Strategic partnerships with OEMs.
• Geographic expansion into emerging markets.

What Threats Does NL Face?

• Economic downturn affecting demand for security and automotive components.
• Increased competition from larger, more diversified manufacturers.
• Fluctuations in raw material prices.
• Changes in regulations affecting the security and automotive industries.

What Are NL's Competitive Advantages?

• Established brand reputation through CompX International.
• Diverse product portfolio catering to various applications.
• Established distribution network with access to OEMs and distributors.
• Proprietary technology in electronic locking systems.

What Does NL Do?

Founded in 1891 and headquartered in Dallas, Texas, NL Industries, Inc. operates primarily through its subsidiary, CompX International Inc., focusing on the component products industry. The company's core business involves the manufacturing and distribution of a diverse range of mechanical and electronic locking mechanisms, including disc tumbler locks, pin tumbler locking mechanisms, and advanced electronic locks like CompX eLock and StealthLock. These products cater to various applications, from ignition systems and mailboxes to high-security narcotics boxes and gas station security. Beyond security components, NL Industries also produces original equipment and aftermarket stainless steel exhaust headers, exhaust pipes, mufflers, gauges, and other accessories primarily for performance and ski/wakeboard boats. Additionally, the company offers insurance brokerage and risk management services, diversifying its revenue streams. NL Industries sells its products directly to original equipment manufacturers and through a network of distributors, serving both domestic and international markets. As a subsidiary of Valhi, Inc., NL Industries leverages its established infrastructure and market presence to maintain a competitive edge in its specialized sectors.

What Products and Services Does NL Offer?

• Manufactures and sells mechanical and electronic cabinet locks.
• Produces disc tumbler locks and pin tumbler locking mechanisms.
• Offers CompX eLock and StealthLock electronic locks.
• Supplies stainless steel exhaust headers, exhaust pipes, and mufflers.
• Provides gauges, including GPS speedometers and tachometers.
• Offers insurance brokerage and risk management services.

How Does NL Make Money?

• Manufacturing and selling mechanical and electronic locking mechanisms.
• Producing and distributing exhaust systems and automotive accessories.
• Providing insurance brokerage and risk management services.
• Selling products directly to original equipment manufacturers (OEMs).
• Distributing products through a network of distributors.

What Industry Does NL Operate In?

NL Industries operates within the security and protection services industry, which is influenced by factors such as economic conditions, construction activity, and consumer spending. The market for security components is driven by the need for enhanced security in residential, commercial, and industrial settings. The aftermarket automotive components sector is tied to the performance of the recreational boating industry and consumer preferences for performance upgrades. Competition includes both large diversified manufacturers and smaller specialized firms. NL Industries' focus on niche markets and its established distribution network provide a competitive advantage.

Who Are NL's Key Customers?

• Original equipment manufacturers (OEMs) in the security and automotive industries.
• Distributors of security and automotive components.
• Consumers seeking aftermarket automotive accessories.
• Businesses and individuals requiring insurance brokerage and risk management services.

FY2026 estForward Outlook

Wall Street analysts project NL Industries, Inc. revenue of about $163.8M for fiscal 2026, with EPS near $0.87.

F-Score 5/9Financial Health

NL Industries, Inc.'s Piotroski F-Score is 5/9, a 9-point checklist of profitability, leverage and efficiency — a middling fundamental profile. Its Altman Z-Score of 3.21 places it in the safe zone, indicating low near-term bankruptcy risk.

ROE -9%Key Financial Metrics

Return on equity for NL Industries, Inc. stands at -9.2%, a gauge of how efficiently it converts shareholder capital into profit. Return on assets is -7.4%, showing how much profit it generates from its asset base. Its free cash flow yield is 1.4%, a gauge of the cash the business throws off relative to its market value. A current ratio of 10.65 indicates the company holds enough short-term assets to cover its near-term obligations. Its earnings yield is -11.6%, the inverse of the P/E and a quick read on earnings relative to price.

NL Industries, Inc. (NL) Valuation Context

Valued at $280M, NL is classified as a micro-cap stock. Relative to its peer group, NL's quantitative score of 47/100 is roughly in line with the peer average of 55/100.

Company Profile

NL Industries, Inc. operates in the Security & Protection Services industry within the Industrials sector. It is headquartered in Dallas, US. The company is led by CEO Courtney J. Riley. NL has traded publicly since 1980.

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Disclaimer: This content is for informational purposes only and does not constitute investment advice. Always do your own research and consult a financial advisor.

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