U.S. Markets close in 2 hrs 8 mins

Why Ubiquiti Networks Stock Soared Today

Steve Symington, The Motley Fool

What happened

Shares of Ubiquiti Networks (NASDAQ: UBNT) were up 16.4% as of 3:00 p.m. EST Friday after the networking-hardware specialist announced strong fiscal second-quarter 2019 results

More specifically, Ubiquiti's revenue during the holiday quarter climbed 22.5% year over year, to $307.3 million, translating to a 75% increase in adjusted earnings per share, to $1.33. Ubiquiti doesn't provide specific quarterly top- or bottom-line guidance, so for perspective -- and while we don't usually pay close attention to Wall Street's demands -- both figures arrived comfortably above consensus estimates for earnings of $1.08 per share on revenue closer to $276 million.

Black Ubiquiti Networks router on a wooden shelf.

IMAGE SOURCE: UBIQUITI NETWORKS.

So what

Ubiquiti Networks' thriving enterprise technology segment once again led the way -- including its UniFi, mFi, and consumer-centric AmpliFi product lines -- with revenue soaring 48.2% year over year, to $194.1 million. Meanwhile, sales from its services provider technology business fell a modest 5.6%, to $113.2 million.

The company also took advantage of the new $200 million share-repurchase program it initiated in November, buying back nearly 357,000 shares for $34.7 million over the past three months.

Now what

Ubiquiti reiterated its longer-term target for gross margin to remain between 45% and 50% -- it stood at 45.6% this quarter -- though the company also repeated its warning that the metric could fall to between 42% and 45% in the near term while it works to mitigate tariff headwinds.

At any rate, Ubiquiti Networks continues to expect its full fiscal-year 2019 results will arrive within its previously provided guidance for revenue of $1.1 billion to $1.2 billion and earnings per share of $4.00 to $4.80. Considering the company has now beat expectations every quarter for the past year, I suspect few investors will be surprised if its full fiscal-year results end near the top of those ranges.

More From The Motley Fool

Steve Symington has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Ubiquiti Networks. The Motley Fool has a disclosure policy.