Ubiquiti Networks (UI) AI Stock Analysis

• Market Cap: $22.80B
• Dividend Yield: 0.64%
• Average Volume (3M): 104.56K
• Price to Earnings (P/E): 41.5
• Beta (1Y): 1.23
• Revenue Growth: 21.43%
• EPS Growth: 56.87%
• Country: US
• Employees: 1,515
• Sector: Technology
• Sector Strength: 83
• Industry: Communication Equipment
• EPS (TTM): 3.00
• Shares Outstanding: 60,491,245
• 10 Day Avg. Volume: 90,954
• 30 Day Avg. Volume: 104,555
• PEG Ratio: 2.62
• Price to Book (P/B): -91.78
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -63.85
• Enterprise Value/Market Cap: 0.51
• Enterprise Value/Revenue: 1.38
• Enterprise Value/Gross Profit: 11.90
• Enterprise Value/Ebitda: 4.79
• 1Y Price Target: $343.50
• Price Target Upside: -7.30% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 2

• Rating: 57 Neutral
• Price Target: $390.00 ▲(5.24%Upside)

Ubiquiti Networks demonstrates strong financial performance with robust revenue and cash generation, which contributes significantly to the score. However, technical indicators suggest caution due to potential downward pressure, and high valuation metrics indicate the stock may be overvalued. These factors combined result in a moderate overall score.

Positive Factors

Product Innovation

Ubiquiti has continued to outpace expectations as the release of new products has sparked an increase in revenue.

Revenue Growth

The momentum in Ubiquiti’s business has been evident with the Company introducing many new products and having ample available inventory for customers.

Negative Factors

Gross Margin

The gross margin estimate has been lowered by one hundred basis points in each of the remaining two quarters of the fiscal year.

Tariffs

The announcement of tariffs for imports into the USA would have an impact on Ubiquiti’s margins.

Ubiquiti Networks Business Overview & Revenue Model

Company Description

Ubiquiti Inc. develops networking technology for service providers, enterprises, and consumers. It develops technology platforms for high-capacity distributed Internet access, unified information technology, and consumer electronics for professional, home, and personal use. Its service provider product platforms offer carrier-class network infrastructure for fixed wireless broadband, wireless backhaul systems, and routing; and enterprise product platforms provide wireless LAN infrastructure, video surveillance products, switching and routing solutions, security gateways, and other WLAN products, as well as consumer products under the Ubiquiti Labs brand name. The company also provides technology platforms, such as airMAX, which include proprietary protocols that contain technologies for minimizing signal noise; EdgeMAX, a software and system routing platform; airFiber, a point-to-point radio system; and UFiber GPON, a plug and play fiber network technology to build high speed fiber internet networks. In addition, it offers UniFi -Enterprise WLAN, an enterprise Wi-Fi system that allows for on-site and remote management through the cloud; UniFi Protect, a video surveillance system, which provides statistical reporting and advanced analytics; UniFi Switch that deliver performance, switching, and power of Ethernet support for enterprise networks; UniFi Console, an enterprise class router and security gateway device; and UniFi Access, a door access system. Further, offers base stations, radios, backhaul equipment, and customer premise equipment; embedded radio products; antennas; and mounting brackets, cables, and power over Ethernet adapters. It serves customers through a network of approximately 100 distributors, online retailers, and direct to customers worldwide. The company was formerly known as Ubiquiti Networks, Inc. and changed its name to Ubiquiti Inc. in August 2019. Ubiquiti Inc. was incorporated in 2003 and is headquartered in New York, New York.

How the Company Makes Money

Ubiquiti Networks generates revenue primarily through the sale of its networking equipment and software solutions. The company's key revenue streams include the sales of its flagship product lines, such as UniFi, AmpliFi, and EdgeMax, which cater to different market segments ranging from small businesses to large enterprises. Ubiquiti also offers cloud-based network management platforms that provide recurring revenue through subscription models. The company's direct-to-consumer sales strategy, coupled with a robust network of distributors and resellers, enhances its market reach. Additionally, strategic partnerships with technology integrators and service providers help Ubiquiti expand its customer base and drive revenue growth.

Ubiquiti Networks Financial Statement Overview

Summary

Ubiquiti Networks showcases a strong financial profile with solid revenue and profitability growth. The income statement reveals high margins, although slightly below peak performance. The balance sheet is stable, with moderate leverage and a high ROE that suggests potential risk if equity levels aren't managed. Cash flows are robust, indicating strong cash generation. Overall, the company is on a solid growth trajectory but should focus on managing leverage and equity.

Income Statement

Ubiquiti Networks shows strong revenue growth with a TTM (Trailing-Twelve-Months) revenue of $2.32 billion, a significant increase from the previous year. The company's gross profit margin stands at 42.15% and net profit margin at 23.64%, reflecting robust profitability. EBIT and EBITDA margins are also healthy at 30.71% and 31.11%, respectively, indicating efficient operations. Overall, the income statement suggests strong growth and profitability, though slightly lower than the peak performance in 2021.

Balance Sheet

The balance sheet reveals moderate financial stability with a debt-to-equity ratio of 0.85, indicating manageable leverage. The equity ratio of 33.60% signifies a moderate reliance on equity financing. However, the return on equity (ROE) is high at 125.93%, due to relatively low equity levels, which might indicate potential risk if not managed carefully. Overall, Ubiquiti's balance sheet is stable but warrants attention to equity growth.

Cash Flow

Ubiquiti Networks demonstrates strong cash flow generation, with TTM free cash flow of $737 million, growing significantly from the prior year. The operating cash flow to net income ratio is robust at 1.35, indicating strong cash conversion from profits. The free cash flow to net income ratio of 1.34 further supports efficient cash management. Overall, the cash flow statements reflect healthy cash generation and management.

Breakdown
TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement		Total Revenue
2.32B	1.93B	1.94B	1.69B	1.90B	1.28B
	Gross Profit
978.86M	739.76M	760.73M	669.81M	912.28M	608.17M
	EBIT
713.25M	499.00M	544.57M	462.26M	742.59M	478.20M
	EBITDA
735.40M	518.25M	560.86M	462.26M	742.59M	485.89M
	Net Income Common Stockholders
549.02M	349.96M	407.64M	378.66M	616.58M	380.30M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
150.97M	126.34M	114.94M	136.65M	250.74M	143.54M
	Total Assets
1.30B	1.15B	1.41B	844.71M	890.99M	737.45M
	Total Debt
370.91M	757.29M	1.14B	853.26M	532.30M	678.09M
	Net Debt
219.94M	630.94M	1.02B	717.03M	282.88M	535.48M
	Total Liabilities
862.15M	1.06B	1.52B	1.23B	888.29M	1.03B
	Stockholders Equity
436.11M	95.06M	-115.73M	-382.88M	2.70M	-295.46M
Cash Flow		Free Cash Flow
737.22M	529.54M	-166.36M	356.79M	593.70M	429.67M
	Operating Cash Flow
741.07M	541.52M	-145.43M	370.26M	612.02M	460.28M
	Investing Cash Flow
-9.28M	-11.97M	-20.93M	-11.18M	-19.27M	69.58M
	Financing Cash Flow
-683.31M	-518.02M	144.96M	-472.27M	-485.95M	-625.40M

Ubiquiti Networks Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 370.57
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For UI, the sentiment is Neutral. The current price of 370.57 is below the 20-day moving average (MA) of 395.55, above the 50-day MA of 368.17, and above the 200-day MA of 323.13, indicating a neutral trend. The MACD of 0.14 indicates Positive momentum. The RSI at 40.38 is Neutral, neither overbought nor oversold. The STOCH value of 8.11 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for UI.

Ubiquiti Networks Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CSCO	78 Outperform	$260.73B	26.98	21.36%	2.49%	0.47%	-17.77%
HPE	71 Outperform	$23.33B	18.37	6.39%	2.92%	11.63%	-24.41%
JNPR	68 Neutral	$11.99B	34.26	7.58%	2.45%	-2.56%	52.05%
ERIC	68 Neutral	$27.94B	177.61	1.67%	0.31%	-2.08%	―
NOK	64 Neutral	$27.08B	34.47	5.70%	4.00%	-9.96%	-6.83%
Sector *	62 Neutral	$11.91B	9.99	-7.22%	4.96%	7.31%	-8.91%
UI	57 Neutral	$22.80B	41.54	237.68%	0.64%	21.43%	56.87%