The wireless connectivity market is experiencing significant growth, driven by the increasing demand for seamless internet access and interconnected devices bringing together various technologies, including Wi-Fi and Bluetooth. The act of data transmission without requiring cables has taken the consumer landscape by storm.

As the technology landscape grows to more smart home and utility device solutions that have already integrated the latest Artificial Intelligence (AI), Augmented reality (AR), and Virtual reality (VR) offerings, the demand for wireless networking is only set to rise fueled by the convenience of connecting all one’s devices with a unified platform.

According to a study by Allied Market Research, the global wireless connectivity market is forecasted to reach $294 billion by 2032, growing at a CAGR of 13.9%.

Amid this thriving landscape, Ubiquiti Inc. (UI) stands out with its innovative networking technology platforms for high-capacity distributed Internet access for both professional and personal use. The company’s industry-leading offerings include UniFi Cloud Gateway, UniFi Wi-Fi, UniFi Protect, and more.

UI’s efforts resonate not only in its offerings but also in its stock performance. The stock climbed 130.4% over the past six months and delivered an impressive gain of 140.4% over the past year, closing the last trading session at $335.53.

Now, let us delve deeper into the factors that could shape UI’s performance in the near future.

Sound Historical Growth

Over the past five years, UI has demonstrated consistent growth across key financial metrics. Its revenue grew at a CAGR of 10.9%, while EBITDA rose at a 4.9% CAGR. Moreover, operational income (EBIT) and total assets expanded at a CAGR of 4.5% and 9.1%, respectively.

Additionally, UI’s net income and EPS grew at a CAGR of 3.1% and 6.2%, respectively.

Strong Financials

For the fiscal 2025 first quarter that ended September 30, UI’s revenues increased 18.8% year-over-year to $550.34 million. Its gross profit rose 26% from the year-ago value to $231.62 million. UI’s income from operations grew 31.9% from the prior year’s quarter to $169.21 million.

Moreover, the company’s non-GAAP net income and non-GAAP EPS increased 23.1% and 23% year-over-year to $129.27 million and $2.14, respectively.

Favorable Analyst Estimates

Analysts predict UI’s revenue and EPS for the fiscal 2025 second quarter ending December 2024 to increase 9.3% and 55.4% year-over-year to $507.96 million and $2.14, respectively.

For the full fiscal year ending June 2025, UI’s revenue and EPS are expected to rise 13.9% and 50.9% from the previous year, reaching $2.20 billion and $8.86, respectively.

High Profitability

UI’s trailing-12-month EBITDA margin stands at 27.79%, 167.2% higher than the industry average of 10.40%. In addition, the company boasts a trailing-12-month net income margin of 19.36%, which is 411.7% higher than the sector average of 3.78%.

Also, the stock’s trailing-12-month levered FCF margin of 31.63% outperforms the industry average of 11.16% by 183.4%. Additionally, UI’s trailing-12-month ROCE of 623.94% is significantly more than the industry average of 4.38%.

POWR Ratings Reflects Optimism

UI’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.

UI has an A grade for Quality, supported by profitability measures that exceed industry benchmarks. Its B grade for Momentum further underscores strong technical performance, with the stock trading above its 100-day moving average of $261.61 and 200-day moving average of $199.15.

Moreover, UI has a B grade for Sentiment, which is in line with the optimistic analyst estimates. Within the B-rated Technology – Communication/Networking industry, UI is ranked #13 out of 44 stocks.

Beyond what is stated above, we have also given UI grades for Stability, Growth, and Value. Get all UI ratings here.

Bottom Line

With a range of industry-leading innovative wireless networking solutions in its portfolio, UI has strengthened its position in the thriving wireless connectivity market. With the rise in demand for consumer gadgets that rely on wireless transmission, the growth of the industry seems to be really streamlined for the near future.

Considering UI’s high profitability, strong financials, optimistic analyst estimates, strategic market position, and stable momentum, now might be the ideal time to consider adding UI to one’s investment portfolio.

How Does Ubiquiti Inc. (UI) Stack Up Against Its Peers?

Although UI’s near-term outlook appears sound, it may be worthwhile to explore its industry peers, who also exhibit even stronger POWR Ratings. So, consider these A (Strong Buy) rated stocks from the Technology – Communication/Networking industry:

Telefonaktiebolaget LM Ericsson (publ) (ERIC)

Ceragon Networks Ltd. (CRNT)

Gilat Satellite Networks Ltd. (GILT)

To explore more A or B-rated Technology – Communication/Networking stocks, click here.

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UI shares were unchanged in premarket trading Tuesday. Year-to-date, UI has gained 143.77%, versus a 25.34% rise in the benchmark S&P 500 index during the same period.

About the Author: Aanchal Sugandh

Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns. More...

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