Ubiquiti Networks Hits 52-Wk High - Analyst Blog


Shares of  Ubiquiti Networks, Inc. ( UBNT ) hit a new 52-week high of $47.39 during yesterday's trading session. However, the stock closed at $46.92, reflecting a solid year-on-year return of 279.6%. Its average trading volume for the last three months aggregated 960,959 shares.

Ubiquiti Networks delivered positive earnings surprises in the last four quarters with an average beat of 10.93% This Zacks Rank #2 (Buy) stock has a market cap of $4.11 billion and long-term earnings growth expectations of 35.5%.

Growth Drivers

Ubiquiti Networks has a strong balance sheet and generates substantial cash flow. In the last reported quarter, the company witnessed a surge in both top and bottom lines, driven by higher revenues across its businesses and regions. In addition, the company's strong performance in its Enterprise Technology segment was one of the catalysts driving the stock.

On Nov 7, Ubiquiti Networks reported strong first-quarter fiscal 2014 results with non-GAAP net income of $41.2 million or 46 cents per share, well exceeding the Zacks Consensus Estimate of 39 cents. In the prior-year quarter, the company had reported adjusted net income of $13.6 million or 15 cents per share.

Ubiquiti Networks' total revenue also surged 110.8% year over year and 28.2% sequentially to $129.7 million. The growth was driven by increased transaction volumes and addition of new services for existing customers. Revenues beat the Zacks Consensus Estimate of $113 million by 14.8%.

In addition, Ubiquiti Networks maintains a sound and flexible balance sheet with ample liquidity that enables it to capitalize on potential acquisition opportunities to fuel its top-line growth. The company had around $280 million in cash & cash equivalents and $51.9 million of operating cash flow at the end of the last reported quarter.

Growth in the company's core business primarily drove the earnings. Ubiquiti Networks' persistent focus on expanding services by increasing investments in innovation and development are some key growth drivers. Diligent execution of operational plans by management and robust growth opportunities in the enterprise business also contributed to the strong results.

Estimate Revisions

Over the last 60 days, most of the earnings estimates for fiscal 2014 and 2015 have been revised upward. Therefore, we envision an uptrend for the stock backed by its strong growth potential with estimates rising by 11.7% to $1.81 for 2014 and by 10.5% to $2.09 for 2015.

Other Stocks to Consider

Some other stocks operating in the same sector worth reckoning include ShoreTel, Inc. ( SHOR ), Mitel Networks Corp. ( MITL ) and Nokia Corp. ( NOK ). All these stocks carry Zacks Rank #2 (Buy).

MITEL NETWORKS (MITL): Free Stock Analysis Report

NOKIA CP-ADR A (NOK): Free Stock Analysis Report

SHORETEL INC (SHOR): Free Stock Analysis Report

UBIQUITI NETWRK (UBNT): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: MITL , NOK , SHOR , UBNT



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