Stock Analysis

Investors five-year losses grow to 64% as the stock sheds US$31m this past week

  •  Updated
NasdaqGS:UEIC
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Statistically speaking, long term investing is a profitable endeavour. But unfortunately, some companies simply don't succeed. For example the Universal Electronics Inc. (NASDAQ:UEIC) share price dropped 64% over five years. We certainly feel for shareholders who bought near the top. And it's not just long term holders hurting, because the stock is down 61% in the last year. Furthermore, it's down 26% in about a quarter. That's not much fun for holders.

If the past week is anything to go by, investor sentiment for Universal Electronics isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

See our latest analysis for Universal Electronics

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During five years of share price growth, Universal Electronics moved from a loss to profitability. On the other hand, it reported a trailing twelve months loss, suggesting it isn't reliably profitable. Other metrics may better explain the share price move.

Arguably, the revenue drop of 3.6% a year for half a decade suggests that the company can't grow in the long term. That could explain the weak share price.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

earnings-and-revenue-growth
NasdaqGS:UEIC Earnings and Revenue Growth September 7th 2022

We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. So it makes a lot of sense to check out what analysts think Universal Electronics will earn in the future (free profit forecasts).

A Different Perspective

We regret to report that Universal Electronics shareholders are down 61% for the year. Unfortunately, that's worse than the broader market decline of 19%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 10% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. If you want to research this stock further, the data on insider buying is an obvious place to start. You can click here to see who has been buying shares - and the price they paid.

Universal Electronics is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

Valuation is complex, but we're helping make it simple.

Find out whether Universal Electronics is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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About NasdaqGS:UEIC

Universal Electronics

Universal Electronics Inc. designs, develops, manufactures, and sells pre-programmed and universal control products, audio-video (AV) accessories, and intelligent wireless security and smart home products for video services, consumer electronics, security, home automation, climate control, and home appliance markets.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation4
Future Growth3
Past Performance1
Financial Health5
Dividends0

Read more about these checks in the individual report sections or in our analysis model.

Excellent balance sheet and good value.