Universal Electronics, Inc. – Value Analysis (NASDAQ:UEIC) : September 26, 2017

Capitalcube gives Universal Electronics, Inc. a score of 91.

Our analysis is based on comparing Universal Electronics, Inc. with the following peers – VOXX International Corporation Class A, Sony Corporation Sponsored ADR, Koss Corporation, Emerson Radio Corp., Royal Philips NV Sponsored ADR, Mad Catz Interactive, Inc. and Logitech International S.A. (VOXX-US, SNE-US, KOSS-US, MSN-US, PHG-US, MCZAF-US and LOGI-US).

Investment Outlook

Universal Electronics, Inc. has a fundamental score of 91 and has a relative valuation of OVERVALUED.

Fundamental Score

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Company Overview

  • Compared to peers, relative underperformance over the last year is in contrast with the more recent outperformance.
  • It currently trades at a Price/Book ratio of (3.15).
  • UEIC-US outperforms its peers with a relatively high operating performance and the market also expects faster growth relative to its peers
  • UEIC-US has a successful operating model with relatively high net profit margins and asset turns.
  • Changes in annual revenues (relative to peers) are better than the change in its earnings (relative to peers), implying the company is focused more on revenues.
  • UEIC-US‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • The company’s relatively high pre-tax margin suggests tight control on operating costs versus peers.
  • Compared with the peers chosen, UEIC-US has had faster revenue growth in prior years and a current P/E ratio that suggests faster growth in the future suggesting superior growth expectations.
  • The company’s level of capital investment seems appropriate to support the company’s growth.
  • UEIC-US has the financial and operating capacity to borrow quickly.

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Leverage & Liquidity

UEIC-US has the financial and operating capacity to borrow quickly.

  • With debt at a relatively low 9.16% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 13.67%), and a well-cushioned interest coverage level of 15.35x, UEIC-US can probably borrow quickly. We classify the company as Quick & Able in terms of its capacity to raise additional debt.
  • Of the 7 chosen peers for the company, only 4 of the stocks have an outstanding debt balance. Companies with no debt include KOSS-US, MSN-US and LOGI-US.

UEIC-US has maintained its Quick & Able profile from the recent year-end.

  • UEIC-US‘s interest coverage is its lowest relative to the last five years and compares to a high of 999x in 2014.
  • The decrease in its interest coverage to 15.35x from 25.84x (in 2016) was also accompanied by a decrease in its peer median during this period to 9.87x from 15.09x.
  • Interest coverage fell 5.28 points relative to peers.
  • UEIC-US‘s debt-EV is its highest relative to the last five years and compares to a low of 0% in 2014.
  • The increase in its debt-EV to 9.16% from 5.35% (in 2016) was also accompanied by an increase in its peer median during this period to 13.67% from 11.77%.
  • Relative to peers, debt-EV rose 1.90 percentage points.

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
VOXX International Corporation Class A 46.93 1.96 -0.16 17.89
Sony Corporation Sponsored ADR 26.17 0.84 35.73 66.19
Koss Corporation 0 3.82 -730.89 999
Emerson Radio Corp. 0 45.71 No interest exp 999
Royal Philips NV Sponsored ADR 18.19 1.49 4.39 27.88
Mad Catz Interactive, Inc. 56.03 0.73 -13.32 -121.57
Logitech International S.A. 0 2.07 No interest exp 999
Universal Electronics Inc. 9.16 1.33 15.35 68.28
Peer Median 13.67 1.73 9.87 67.23
Best In Class 9.16 45.71 No interest exp 999

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Company Profile

Universal Electronics, Inc. engages in the design, development, and trade of control and sensor technology solutions. It operates through the following geographical segments: United States; Asia (excluding PRC); People’s Republic of China; Europe; Latin America; and Other. It offers pre-programmed universal infrared and radio frequency remote controls; integrated circuits; and software applications for televisions, set-top boxes, stereos, smart phones, tablets, gaming controllers, and consumer electronic devices. The company was founded in 1986 and is headquartered in Santa Ana, CA.


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