Bull of the Day: Ubiquiti Netowrks (UBNT)
Ubiquiti Networks (UBNT) Has put together back to back positive earnings surprises and that stock has risen to a Zacks Rank #1 (Strong Buy). It is the Bull of the Day.
Growing Product Line
The airMax line is a point to point and point to multipoint wireless service that has seen eight consecutive quarters of double digit growth. The UniFi product is all about scalable WiFi, network management. The airVision division deals with security cameras. airMax has seen 8 consecutive quarters of double digit sequential growth. Unifi has seen its revenues triple since it was first introduced in March of 2011. The airVision product just started shipping in 2Q12.
Company Description
Ubiquiti Networks is a communications technology company, that offers a portfolio of communications networking products and solutions in the outdoor wireless, enterprise WLAN, video surveillance, wireless backhaul, and machine-to-machine communications markets worldwide.
UNTY Beats Estimates In Each Of the Last Two Quarters
Dating back to the December 2012 quarter, Ubiquiti Networks has beaten the Zacks Consensus Estimate in two consecutive quarters. The December 2012 quarter saw the company post a positive earnings surprise of 5.3%. The following quarter saw another surprise of 4.6%. The beats come after a miss of 17% in the September 2012 quarters.
Secondary Shouldn't Scare You
The company recently moved to assist shareholders that want to liquidate some of their holdings. A 7.7 million share offering is slated for June 2013, but that could provide a great entry point.
Projected Growth is Impressive
Topline growth over the last three quarters has been just what investors want to see. The company brought in $62M in the September 2012 quarter and followed that up with $75M in the December quarter. The most recent quarter saw revenue increase again to $83M. In each of the last two quarters, the company has beaten on the top and bottom lines.
Valuation
The valuation picture for UBNT is a pretty reasonable one given the recent beats and revenue growth. The stock is trading at a 22x trailing PE multiple, which is lower than the 26x industry average. The forward PE of 22x is slightly higher than the 21x industry average. The price to book ratio is well above the industry average, while the price to sales ratio of 5.3x is a little more than double the 2x industry average.
The Chart
A quick look at the price and consensus chart shows that there is not a lot of earnings history for this stock. The recent run from single digits to the low twenties has been accompanied by a nice move higher in the Zacks Consensus Estimate. As earnings continue to improve, this stock is like to continue to move higher.
Brian Bolan is a Stock Strategist for Zacks.com. He is the Editor in charge of the Zacks Home Run Investor service, a Buy and Hold service where he recommends the stocks in the portfolio.
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