Reviewing Ubiquiti (UI) Valuation After Strong Earnings Growth And Higher Dividend

Ubiquiti (UI) is back in focus after reporting higher year over year revenue and net income for the quarter, alongside declaring a regular US$0.80 per share cash dividend payable on February 23, 2026.

See our latest analysis for Ubiquiti.

The latest earnings and dividend news comes after a strong run in the share price, with a 30.83% 1 month share price return and a 35.32% 3 month share price return. The 1 year total shareholder return of 112.31% suggests momentum has been building over a longer period.

If Ubiquiti’s recent move has your attention, it could be a good moment to broaden your search with our link to 23 top founder-led companies.

With Ubiquiti’s share price racing ahead of its analyst price target, the key question now is whether the current valuation already reflects the stronger earnings and dividend profile, or whether the market is still underestimating its future growth potential.

Preferred P/E of 49x: Is it justified?

Right now Ubiquiti trades at a P/E of 49x, with the last close at $720.06, which sits above both its estimated fair P/E and the wider industry.

The P/E ratio compares the share price to earnings per share, so a higher P/E usually means the market is willing to pay more today for each dollar of current earnings. For a company like Ubiquiti, with earnings growth of 99.7% over the past year and 5.8% per year over the past 5 years, that kind of premium often reflects expectations that profitability can be sustained at stronger levels than in the past.

However, there is a gap between what our fair ratio work suggests and where the market is pricing the stock. Ubiquiti trades on a P/E of 49x, while the estimated fair P/E is 36.1x. This implies the current market price embeds richer expectations than the level the fair ratio points to over time. Against that, the stock is described as good value when set against peers on a 49x P/E versus a peer average of 67x, yet still expensive compared to the broader US Communications industry P/E of 31.5x, so the market is clearly placing Ubiquiti toward the higher end of the sector on earnings.

Explore the SWS fair ratio for Ubiquiti

Result: Price-to-earnings of 49x (OVERVALUED)

However, the premium P/E and the share price trading above the US$623.50 analyst target could leave less room for error if growth or margins weaken.

Find out about the key risks to this Ubiquiti narrative.

Another view using our DCF model

Our DCF model presents a very different picture from the 49x P/E. Based on this view, Ubiquiti at $720.06 is priced well above an estimated future cash flow value of $196.99. This suggests a rich valuation and raises a simple question: how much optimism are you really paying for?

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 54 high quality undervalued stocks. 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 see the numbers differently or simply want to rely on your own work, you can pull the data together and shape a full story in just a few minutes, then Do it your way.

A great starting point for your Ubiquiti research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

Ready for more investment ideas?

If Ubiquiti has sharpened your focus, do not stop here. Broaden your watchlist with a few focused stock ideas that match your style and risk comfort.

• Target strong fundamentals and resilience by scanning companies in our solid balance sheet and fundamentals stocks screener (44 results), so you are not relying on story alone.
• Hunt for quality at a reasonable price with our 54 high quality undervalued stocks, so you can quickly spot stocks where expectations and fundamentals may not yet line up.
• Spot potential earlier stage opportunities by reviewing the 29 elite penny stocks with strong financials, so you are not finding out about them only after the big move has already happened.

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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