Critical Comparison: Sierra Wireless (NASDAQ:SWIR) versus Ubiquiti (NASDAQ:UI)

Sierra Wireless (NASDAQ:SWIR) and Ubiquiti (NYSE:UI) are both computer and technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, dividends, profitability, institutional ownership, risk, analyst recommendations and valuation.

Profitability

This table compares Sierra Wireless and Ubiquiti’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sierra Wireless -5.75% 0.02% 0.01%
Ubiquiti 27.78% 206.17% 37.61%

Dividends

Ubiquiti pays an annual dividend of $1.20 per share and has a dividend yield of 0.9%. Sierra Wireless does not pay a dividend. Ubiquiti pays out 25.3% of its earnings in the form of a dividend.

Insider & Institutional Ownership

41.1% of Sierra Wireless shares are owned by institutional investors. Comparatively, 19.1% of Ubiquiti shares are owned by institutional investors. 2.0% of Sierra Wireless shares are owned by insiders. Comparatively, 78.7% of Ubiquiti shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Sierra Wireless and Ubiquiti’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sierra Wireless $793.60 million 0.51 -$24.61 million $0.13 85.58
Ubiquiti $1.16 billion 7.47 $322.69 million $4.74 26.66

Ubiquiti has higher revenue and earnings than Sierra Wireless. Ubiquiti is trading at a lower price-to-earnings ratio than Sierra Wireless, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Sierra Wireless has a beta of 2, indicating that its stock price is 100% more volatile than the S&P 500. Comparatively, Ubiquiti has a beta of 1.22, indicating that its stock price is 22% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and target prices for Sierra Wireless and Ubiquiti, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sierra Wireless 2 3 3 0 2.13
Ubiquiti 0 0 1 0 3.00

Sierra Wireless presently has a consensus target price of $15.64, suggesting a potential upside of 40.61%. Given Sierra Wireless’ higher probable upside, analysts plainly believe Sierra Wireless is more favorable than Ubiquiti.

Summary

Ubiquiti beats Sierra Wireless on 10 of the 16 factors compared between the two stocks.

Sierra Wireless Company Profile

Sierra Wireless, Inc., together with its subsidiaries, manufactures and sells cellular wireless devices, and provide services in the wireless communications and information technology industry in the Americas, Europe, the Middle East, Africa, and the Asia-Pacific. Its Original Equipment Manufacturer (OEM) Solutions segment offers embedded cellular modules, short range wireless modules, global navigation satellite system modules, software, and tools to integrate wireless connectivity into various products and solutions for OEM customers, including the embedded wireless modules product portfolio; cloud-based remote device and data management solutions; and Legato, an open source Linux-based platform. It also offers professional services to OEM customers during their product development and launch process. Its Enterprise Solutions segment provides intelligent routers and gateways, as well as security and device management solutions, and professional services. Its Internet of Things (IoT) Services segment offers cellular connectivity services, which include smart subscriber identity module and core network platforms; a cloud based platform to deploy and manage IoT subscriptions, devices, and applications over the air; managed broadband cellular services, which include a combination of hardware, connectivity services, and cloud services; and specific vertical market IoT solutions that include segments, such as security, asset tracking and asset optimization. The company serves automotive, transportation, enterprise networking, energy, sales and payment, mobile computing, security, industrial monitoring, field services, residential, healthcare, public safety, retail, industrial, manufacturing, and cleantech industries, as well as financial enterprises. It serves through direct channels; and indirect channels, including OEMs, distributors, value-added resellers, and mobile network operators. The company was founded in 1993 and is headquartered in Richmond, Canada.

Ubiquiti Company Profile

Ubiquiti Inc. develops networking technology for service providers, enterprises, and consumers worldwide. It develops technology platforms for high-capacity distributed Internet access, unified information technology, and consumer electronics for professional, home, and personal use. Its service provider product platforms offer carrier-class network infrastructure for fixed wireless broadband, wireless backhaul systems, and routing; and enterprise product platforms provide wireless LAN infrastructure, video surveillance products, switching and routing solutions, security gateways, and other WLAN products, as well as offers consumer products under the Ubiquiti Labs brand name. The company also provides technology platforms, such as airMAX platform, which include proprietary protocols that contain technologies for minimizing signal noise; EdgeMAX, a software and system routing platform; airFiber, a point-to-point radio system; and UFiber GPON platform to build high speed fiber Internet networks. In addition, it offers UniFi Enterprise WLAN; UniFi Video, a video surveillance system; UniFi Switch that deliver performance, switching, and PoE+ support for enterprise networks; and UniFi Security Gateway that provide routing and network security, as well as develops AmpliFi platform, a Wi-Fi system solution for connected homes. Further, Ubiquiti Inc. offers embedded radio products; and mounting brackets, cables, and power over Ethernet adapters. It serves customers through a network of approximately 100 distributors and online retailers worldwide. The company was formerly known as Ubiquiti Networks, Inc. and changed its name to Ubiquiti Inc. in August 2019. Ubiquiti Inc. was incorporated in 2003 and is headquartered in New York, New York.

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