A month has gone by since the last earnings report for Ubiquiti Networks, Inc. . Shares have lost about 22.3% in the past month, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Ubiquiti Misses on Q2 Earnings; Revenues Up Y/Y
Putting an end to the six-quarter earnings beat streak, Ubiquiti second-quarter fiscal 2017 earnings fell short of estimates. The company’s adjusted earnings came in at $0.71, which missed the Zacks Consensus Estimate of $0.75 by 5.3%.
On a non-GAAP basis, the company’s earnings per share were $0.72, reflecting 24.1% growth year over year. However, the figure came below the projected range of $0.73–$0.79. Ubiquiti’s overarching business model and impressive top-line growth drove the stellar performance during the quarter.
Inside the Headlines
Total revenue of $213.5 million steered past the company’s projected range of $200–$210 million. Also, it grew 31.9% on a year-over-year basis and topped the Zacks Consensus Estimate of $205 million comfortably. Solid demand of all product lines across each end market proved conducive to top-line growth.
The company’s Enterprise Technology segment continued to fare remarkably well, with revenues soaring a whopping 87.4% year over year to $98.0 million. The striking growth was fueled by the entire UniFi product family, particularly in the U.S. market. Especially, growing adoption of UniFi AC access points, UniFi Switch, UniFi Video and other industry-leading products drove sales. Also, robust market traction of new consumer products, including the AmpliFi HD Mesh Router and AmpliFi HD MeshPoints, supplemented the top-line performance.
Even the Service Provider Technology segment achieved growth of 5.5% year over year, generating $115.6 million. Higher sales of new offerings for the Ubiquiti community of service providers drove sales growth of this segment.
On a geographic basis, North America charted the strongest growth, as revenues surged 64.8% compared to the prior-year quarter figure. In addition, the Europe, Middle East and Africa, and the Asia Pacific regions witnessed 26.9% and 11.5% growth, on a year-over-year basis, respectively. However, after an impressive rebound in the last reported quarter, South America sales dipped again in the fiscal second quarter by 17.9% compared to the year-earlier tally.
Gross margin for the quarter shrunk 420 basis points year over year to 44.6% largely on account of unfavorable product mix. Furthermore, expedited shipping charges, incurred in relation to the availability of AmpliFi products in the U.S., marred the gross margin performance in the quarter.
Product Launches
Keeping its momentum of new offerings alive in the quarter, Ubiquiti rolled out a high performance access point, UniFi AC HD and released a new operating system – AirOS 8.0 – which offers complete compatibility between airMAX ac and airMAX devices. The company also introduced free software for Ubiquiti's service provider customers, called UCRM that will aid in streamlining billing and customer management.
In addition, it expanded its AmpliFi and UniFi Switch product lines by launching a number of fresh offerings. Under the AmpliFi product family, it launched AmpliFi HD MeshPoint from Ubiquiti Labs and also introduced US-16-XG, US-8-60W and US-8 switches for the UniFi Switch portfolio.
Liquidity & Share Repurchases
Ubiquiti ended the fiscal second quarter with cash and cash equivalents of $612.7 million, compared with $573.6 million as of Sep 30, 2016. At the end of Dec 31, 2016, the company’s long-term debt was $184.2 million, down from $187.9 million recorded at the end of Sep 30, 2016.
Guidance
Incorporating the solid performance in the reported quarter, as well as favorable business trends and sturdy demand environment, the company released optimistic guidance for third-quarter fiscal 2017.
Management projects revenues in the range of $210–220 million. Non-GAAP earnings are expected within $0.73–$0.79 per share, while GAAP earnings per share are anticipated in the band of $0.72–$0.78.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions. In the past month, the consensus estimate has shifted lower by 13.89% due to these changes.
VGM Scores
At this time, Ubiquiti's stock has an average Growth Score of 'C', though it is lagging a lot on the momentum front with a 'F'. However, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is equally suitable for value investors and growth investors.
Outlook
The stock has a Zacks Rank #2 (Buy). We are looking for an above average return from the stock in the next few months.
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Ubiquiti (UBNT) Down 22.3% Since Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Ubiquiti Networks, Inc. . Shares have lost about 22.3% in the past month, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Ubiquiti Misses on Q2 Earnings; Revenues Up Y/Y
Putting an end to the six-quarter earnings beat streak, Ubiquiti second-quarter fiscal 2017 earnings fell short of estimates. The company’s adjusted earnings came in at $0.71, which missed the Zacks Consensus Estimate of $0.75 by 5.3%.
On a non-GAAP basis, the company’s earnings per share were $0.72, reflecting 24.1% growth year over year. However, the figure came below the projected range of $0.73–$0.79. Ubiquiti’s overarching business model and impressive top-line growth drove the stellar performance during the quarter.
Inside the Headlines
Total revenue of $213.5 million steered past the company’s projected range of $200–$210 million. Also, it grew 31.9% on a year-over-year basis and topped the Zacks Consensus Estimate of $205 million comfortably. Solid demand of all product lines across each end market proved conducive to top-line growth.
The company’s Enterprise Technology segment continued to fare remarkably well, with revenues soaring a whopping 87.4% year over year to $98.0 million. The striking growth was fueled by the entire UniFi product family, particularly in the U.S. market. Especially, growing adoption of UniFi AC access points, UniFi Switch, UniFi Video and other industry-leading products drove sales. Also, robust market traction of new consumer products, including the AmpliFi HD Mesh Router and AmpliFi HD MeshPoints, supplemented the top-line performance.
Even the Service Provider Technology segment achieved growth of 5.5% year over year, generating $115.6 million. Higher sales of new offerings for the Ubiquiti community of service providers drove sales growth of this segment.
On a geographic basis, North America charted the strongest growth, as revenues surged 64.8% compared to the prior-year quarter figure. In addition, the Europe, Middle East and Africa, and the Asia Pacific regions witnessed 26.9% and 11.5% growth, on a year-over-year basis, respectively. However, after an impressive rebound in the last reported quarter, South America sales dipped again in the fiscal second quarter by 17.9% compared to the year-earlier tally.
Gross margin for the quarter shrunk 420 basis points year over year to 44.6% largely on account of unfavorable product mix. Furthermore, expedited shipping charges, incurred in relation to the availability of AmpliFi products in the U.S., marred the gross margin performance in the quarter.
Product Launches
Keeping its momentum of new offerings alive in the quarter, Ubiquiti rolled out a high performance access point, UniFi AC HD and released a new operating system – AirOS 8.0 – which offers complete compatibility between airMAX ac and airMAX devices. The company also introduced free software for Ubiquiti's service provider customers, called UCRM that will aid in streamlining billing and customer management.
In addition, it expanded its AmpliFi and UniFi Switch product lines by launching a number of fresh offerings. Under the AmpliFi product family, it launched AmpliFi HD MeshPoint from Ubiquiti Labs and also introduced US-16-XG, US-8-60W and US-8 switches for the UniFi Switch portfolio.
Liquidity & Share Repurchases
Ubiquiti ended the fiscal second quarter with cash and cash equivalents of $612.7 million, compared with $573.6 million as of Sep 30, 2016. At the end of Dec 31, 2016, the company’s long-term debt was $184.2 million, down from $187.9 million recorded at the end of Sep 30, 2016.
Guidance
Incorporating the solid performance in the reported quarter, as well as favorable business trends and sturdy demand environment, the company released optimistic guidance for third-quarter fiscal 2017.
Management projects revenues in the range of $210–220 million. Non-GAAP earnings are expected within $0.73–$0.79 per share, while GAAP earnings per share are anticipated in the band of $0.72–$0.78.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions. In the past month, the consensus estimate has shifted lower by 13.89% due to these changes.
Ubiquiti Networks, Inc. Price and Consensus
Ubiquiti Networks, Inc. Price and Consensus | Ubiquiti Networks, Inc. Quote
VGM Scores
At this time, Ubiquiti's stock has an average Growth Score of 'C', though it is lagging a lot on the momentum front with a 'F'. However, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is equally suitable for value investors and growth investors.
Outlook
The stock has a Zacks Rank #2 (Buy). We are looking for an above average return from the stock in the next few months.