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Ubiquiti Inc. (UI) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Ubiquiti Inc. (UI)

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Intrinsic Value (DCF)

Current$553.52
→
Intrinsic$249.20
-55%
$169.25$249.20$401.10
Current price reflects execution expectations above 15% growth — not unreasonable for quality businesses.
Range: Bear $169 → Bull $401. Current price implies expectations above the base case, closer to bull expectations.
Current price reflects assumptions at the upper end of our valuation range (bull case: $401).
Discount ↓Growth →11%13%15%17%
8%$301$327$355$385
10%$212$230$249$270
12%$163$176$190$206
14%$131$142$153$165

Bull Case

  • Bull case ($401) with 18% growth, 9% discount rate

Bear Case

  • Bear case ($169) implies 69% downside at 12% growth, 12% discount
  • Trading 55% above base case — execution must exceed assumptions to justify
  • Price exceeds bull case ($401) — requires exceptional execution
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5-Year Free Cash Flow Projection

Year 1$722.72M
Year 2$832.46M
Year 3$958.87M
Year 4$1.10B
Year 5$1.27B
Terminal$18.72B

📐 Model Inputs

Growth Rate15.2%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$627.44MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is UI stock undervalued or overvalued?
🔴 OVERVALUED

UI trades at $553.52 vs. our DCF-derived intrinsic value of $249.20, implying -56% downside. Using a 10.0% WACC and 15.2% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($363.22) suggests limited upside.

What is UI's intrinsic value?

Using a 5-year DCF model: Base FCF of $627M, projected at 15.2% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $148M net debt and dividing by 0.06B shares: Bear $169.00 | Base $249.20 | Bull $363.22. Current price $553.52 implies -56% to base case.

How is UI's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 15.2% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($15.23B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 24.3x.