Shares of Ubiquiti Networks Inc. (UBNT) reached a 52-week high of $55.57 on Wednesday, Mar 19, 2014. However, the stock closed at $54.85, representing a robust one-year return of about 310.25% and a decent year-to-date return of about 20.02%. Average volume of shares traded over the last three months is approximately 1,288,730.
Strong second-quarter 2014 results, growth in the company’s core business, consistent focus on expanding services and strong potential in the enterprise business are also some of the growth catalysts for the company.
Ubiquiti delivered positive earnings surprises in the last four quarters with an average beat of 11.3%. This Zacks Rank #2 (Buy) company has a market cap of $4.82 billion and a long-term expected earnings growth rate of 26.3%.
Ubiquiti Networks primarily develops high performance networking technology for its service providers. The company’s technology platforms essentially focus on delivering highly advanced and easily deployable solutions that appeal to a broad customer base in underserved and underpenetrated markets. The company’s differentiated business model has enabled it to sever traditional barriers such as high product and network deployment costs by offering solutions with disruptive price-performance characteristics.
Further, the company offers a broad portfolio of networking products and solutions for service providers. Ubiquiti’s service provider segment offers carrier-class network infrastructure for fixed wireless broadband, wireless backhaul systems and routing, while its enterprise product segment provides wireless LAN infrastructure, video surveillance products and machine-to-machine communication components. The company’s products are well differentiated given its proprietary software protocol innovation, firmware expertise and hardware design capabilities.
Therefore, this well-classified segregation allows Ubiquiti’s portfolio to meet the demands of video, voice and data applications at competitive prices.
This apart, the company also launched Ubiquiti World Network (UWN), a wireless Internet platform. UWN is a consortium of independent Internet service providers (ISP) across the globe. It was designed to provide the ISPs with a unified platform to foster growth and innovation in the wireless industry while catering to consumers’ needs.
Strong 2Q14 Earnings
Ubiquiti Networks, Inc. reported strong second-quarter fiscal 2014 results with non-GAAP earnings of 48 cents per share, exceeding the Zacks Consensus Estimate of 44 cents and the prior-year quarter earnings of 2 cents. The company reported non-GAAP net income of $42.6 million compared with $18.3 million in the year-ago quarter, reflecting an increase of 132.5%.
Ubiquiti’s total revenue surged 84.8% year over year and 6.7% sequentially to $138.4 million. The growth was driven by increased transaction volumes and addition of new services for existing customers. Additionally, strong performances in the Enterprise Technology segment contributed to top-line growth. Revenues beat the Zacks Consensus Estimate of $132 million by 4.8%.
Over the last 60 days, all the 3 brokers covering the stock have raised their estimates upward for the current and next quarter. For 2014 as well, all the 3 estimates have been revised upward. Thus, the Zacks Consensus Estimate for the current and the next quarter grew 6.7% to 48 cents and 4.3% to 49 cents, respectively.
For fiscal 2014, estimates increased 3.9% to $1.88 while for 2015, estimates were up 2.4% to $2.14 a share.
Other Stocks to Consider
Investors interested in the heavy industries sector can consider Juniper Networks Inc. (JNPR), Shoretel Inc. (SHOR) and Harris Corp. (HRS). Juniper and Shoretel carry a Zacks Rank #1 (Strong Buy) while Harris carries a Zacks Rank #23 (Buy).