Ubiquiti Networks, Inc. (NASDAQ:UBNT), which is in the communications business, and is based in United States, received a lot of attention from a substantial price increase on the NasdaqGS over the last few months. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s take a look at Ubiquiti Networks’s outlook and value based on the most recent financial data to see if the opportunity still exists.
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Is Ubiquiti Networks still cheap?According to my valuation model, Ubiquiti Networks seems to be fairly priced at around 12.19% above my intrinsic value, which means if you buy Ubiquiti Networks today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $93.72, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that Ubiquiti Networks’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will Ubiquiti Networks generate?Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. Ubiquiti Networks’s earnings over the next few years are expected to increase by 46%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? UBNT’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on UBNT, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Ubiquiti Networks. You can find everything you need to know about Ubiquiti Networks in the latest infographic research report. If you are no longer interested in Ubiquiti Networks, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.