Ubiquiti (UI): Evaluating Valuation After Strong Profit Growth and Rising Insider Ownership

Ubiquiti (UI) has attracted fresh attention after reporting rising profitability, wider EBIT margins, and significant insider ownership. These positive signals suggest a management team that is aligned with shareholders and a business that is geared toward sustained growth.

See our latest analysis for Ubiquiti.

Ubiquiti’s share price momentum has been striking, with a 61.8% gain over the past 90 days and an eye-catching year-to-date share price return of 94%. Its total shareholder return over the latest 12 months soared to nearly 180%, reflecting growing optimism around the company’s upward trajectory and strong execution.

If the recent surge in performance has you looking for what else is gaining attention, now is the perfect moment to broaden your search and discover fast growing stocks with high insider ownership

But after such dramatic gains, investors have to wonder whether there is still value left to unlock in Ubiquiti or if the market has already factored in the company’s future growth story.

Price-to-Earnings of 55.7x: Is it justified?

Ubiquiti trades at a price-to-earnings (P/E) ratio of 55.7x, which puts its valuation well above the US Communications industry average as of the latest close at $655.02.

The P/E ratio compares the company's share price against its earnings per share. This shows how much investors are willing to pay for each dollar of profit. For high-growth technology companies, elevated P/E multiples can signal confidence in future earnings but also imply higher investment risk if growth stalls.

At 55.7x, Ubiquiti's P/E multiple is nearly double the industry average of 29.7x. This reflects the market's significant optimism or a premium for the company’s recent outperformance. However, it is a discount compared to peer companies averaging a higher 70x P/E ratio. This may suggest that Ubiquiti could either be more fairly priced or less aggressively valued within its competitive set.

Currently, there is insufficient data to derive a fair ratio benchmark. Investors must weigh whether the company’s strong price momentum is justified by future earnings potential or stretches beyond sustainable levels.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Earnings of 55.7x (OVERVALUED)

However, downside risks remain, including a steep discount to analyst price targets and the potential that recent gains have overshot intrinsic value.

Find out about the key risks to this Ubiquiti narrative.

Another View: Discounted Cash Flow Suggests Overvaluation

Taking a different approach, our DCF model estimates Ubiquiti’s fair value at $266.46, which is much lower than its current share price of $655.02. This suggests the market may be overly optimistic about future cash flows. Is the upside already priced in, or could expectations be too high?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Ubiquiti for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Ubiquiti Narrative

If you think there is another angle worth exploring or prefer to dive into the numbers yourself, it’s easy to build your own perspective in a matter of minutes. So why not Do it your way

A great starting point for your Ubiquiti research is our analysis highlighting 1 key reward and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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