Ubiquiti (NYSE:UI): A High-EPS Growth Story with Strong Insider Alignment

Ubiquiti Inc. (NYSE:UI) has long been a standout in the enterprise networking sector, but its recent financial performance and governance structure have elevated it to a compelling case study in long-term value creation. With a 24–33% compound annual growth rate (CAGR) in earnings per share (EPS) over the past three years, expanding EBIT margins, and a staggering 93% insider ownership stake, the company exemplifies how strong governance and operational discipline can drive sustainable growth. However, its lofty valuation metrics and competitive risks demand careful scrutiny.

EPS Growth: A 3-Year CAGR of 32% Validates Resilience

Ubiquiti's EPS trajectory underscores its ability to navigate macroeconomic headwinds. From $6.74 in 2023 to $11.76 in 2025, the company achieved a 32% CAGR over this period. This outperformance was fueled by its Enterprise Technology segment, which generated $680.1 million in Q4 2025 revenue-a 57.5% jump from the prior-year quarter. While the five-year CAGR (15.2%) appears modest, the recent acceleration reflects strategic shifts toward high-margin products and improved inventory management.

Critically, this growth is not a one-off. The company's Q4 2025 results included a 103.11% year-over-year EPS surge, driven by a $53.7 million tax benefit and a 45.1% gross margin-the highest since 2021. Such resilience suggests Ubiquiti's business model is adapting to global supply chain dynamics and inflationary pressures.

EBIT Margin Expansion: A 25.6% Surge in 2025

Ubiquiti's profitability has also seen a dramatic turnaround. Its EBIT margin surged from 25.88% in 2024 to 32.50% in 2025, a 25.59% increase. This expansion was driven by a favorable product mix (favoring high-margin Enterprise Technology solutions) and cost discipline, including reduced shipping and inventory expenses. Over the past five years, EBIT margins have fluctuated between 25.88% and 39.12%, but the 2025 rebound signals a return to operational excellence.

Insider Ownership and CEO Compensation: A Model of Alignment

Ubiquiti's governance structure is a standout feature. Insiders hold 93.04% of the company, a level of ownership that is rare in public markets and signals deep alignment with shareholders. CEO Robert J. Pera, who owns 10% of the company, received $630,709 in total compensation in 2025, a 22% decline from 2024 and entirely in non-salary benefits such as personal aircraft use. This contrasts sharply with S&P 500 CEO pay averages of $18.9 million in 2024. Pera's pay ratio of 9:1 compared to median employee compensation further underscores his commitment to equitable value distribution.

Valuation Concerns: A P/E of 65.58 and PEG of 2.81

Despite its strong fundamentals, Ubiquiti's valuation raises red flags. As of October 2025, the stock traded at a P/E ratio of 65.58, far above its 10-year average of 29.77. A discounted cash flow (DCF) analysis suggests the stock is overvalued by 166.6%, with a fair value estimate of $142.38 versus a market price of $569.57. The PEG ratio, at 2.81 for the next five years, also indicates the market is pricing in aggressive growth expectations.

However, these metrics must be contextualized. Ubiquiti's $500 million stock repurchase program and $0.80 quarterly dividend signal confidence in future cash flows. If the company sustains its EBIT margin expansion and EPS growth, the current premium valuation could be justified over time.

Risks: Competition and Operational Vulnerabilities

Ubiquiti's dominance in the asset-light, high-margin networking hardware market is under threat. Larger competitors like Cisco and Aruba are intensifying price competition, while its reliance on a concentrated product ecosystem exposes it to demand shocks. Additionally, global supply chain disruptions-though mitigated by 2025-remain a wildcard.

Conclusion: A High-Risk, High-Reward Proposition

Ubiquiti's combination of 24–33% EPS growth, expanding margins, and 93% insider ownership makes it a compelling long-term investment. Its governance structure, led by a CEO with minimal traditional compensation and a massive personal stake, aligns management with shareholders. Yet, the stock's valuation premium and competitive risks necessitate a cautious approach. For investors with a multi-year horizon and a tolerance for volatility, Ubiquiti represents a unique blend of operational excellence and governance discipline-provided its growth can outpace its lofty expectations.