Ubiquiti Reports Strong Q2 Fiscal 2026 Results Amid Persistent Overvaluation Concerns

What happened

Ubiquiti Inc. announced its second quarter fiscal 2026 financial results, reporting revenues of $814.9 million and earnings per share of $3.86 (GAAP) and $3.88 (non-GAAP). This represents a sequential increase from the previous quarter's $734 million in revenue and $3.44 EPS, indicating continued top-line and bottom-line growth. The company also declared a $0.80 per share cash dividend, consistent with its capital allocation strategy of returning cash to shareholders. Despite these positive figures, the stock remains significantly overvalued relative to a discounted cash flow estimate of ~$177 per share, as highlighted in the DeepValue report. The report cautions that underlying risks such as intense competition, governance issues, and inventory volatility could undermine future performance, making the current price unjustified.

Implication

The strong revenue and EPS figures demonstrate Ubiquiti's operational efficiency and market demand for its networking products. However, with the stock trading at ~49x P/E and over 225% above DCF intrinsic value, the margin of safety remains minimal for investors. Persistent risks including founder dependence, past security lapses, and competitive pressures in hardware commoditization are not mitigated by a single quarter's performance. Investors should monitor whether this growth can be sustained against tougher comps and potential margin compression from tariffs or pricing wars. Consequently, existing holders might consider trimming positions, while new capital should await a valuation reset or clearer signs of durable competitive advantages.

Thesis delta

The new results confirm Ubiquiti's ability to deliver strong financial performance in the near term, but they do not materially change the overvaluation thesis. The DeepValue report's 'POTENTIAL SELL' stance remains valid as the stock price still embeds overly optimistic assumptions about long-term growth and risk mitigation.