It has been about a month since the last earnings report for Ubiquiti Networks, Inc. (UBNT - Free Report) . Shares have added about 3.5% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is UBNT due for a pullback? 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 Beats on Q3 Earnings, Reiterates Guidance
Ubiquiti reported solid third-quarter fiscal 2018 results with year-over-year increase in earnings and revenues driven by healthy growth dynamics. Adjusted earnings came in at 98 cents per share, which beat the Zacks Consensus Estimate of 80 cents by 22.5%. The bottom line jumped 25.6% from year-ago figure of 78 cents. The year-over-year improvement can primarily be attributable to impressive growth in revenues generated by its enterprise technology during the quarter.
Ubiquiti reported revenues of $250.4 million, which lies within the company’s projected range of $245-$260 million. The top line grew 14.6% on a year-over-year basis. Increase in the number of installations of their service providing technology as well as the number of active users on the mobile application has proved conducive to top-line growth. GAAP gross margin improved to 45.7% from 45.4% in the last-year quarter.
The company’s Enterprise Technology segment continued to fare remarkably well, with revenues surging 31.6% year over year to $149.5 million. However, the Service Provider Technology segment experienced a drop of 3.6%, generating $100.9 million. The company attributes this fall in revenues to some imperfections in the supply chain and aims to take necessary steps to fill this gap and strengthen this segment.
In terms of geography, revenues from EMEA regions (Europe, the Middle East and Africa) increased 29.6% year over year. This rise can be attributed to rise in demand owing to more customer awareness of the powerful performance of the company’s UniFi platform, especially in Western Europe. North America also witnessed 20.7% growth on a year-over-year basis with revenues of $94.8 million. Strong revenue performance in EMEA and North America managed to offset the lag in the revenues generated from South America and Asia Pacific (down 28.4% and 9.3%, respectively).
Ubiquiti ended the fiscal third quarter with cash and cash equivalents of $690.8 million, while long-term debt was about $466.5 million.
Ubiquiti has reiterated its previous guidance for fiscal 2018. The company continues to expect generating $1 billion revenues and earnings per share of $3.70 in fiscal 2018.
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.
At this time, UBNT has a great Growth Score of A, though it is lagging a bit on the momentum front with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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 more suitable for growth investors than momentum investors.
UBNT has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.