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Seen the Remote? Universal Electronics (UEIC)

January 23, 2013

The countdown to the Super Bowl is underway.

Do you know where your remote/clicker is?

Founded 1986, Universal Electronics (UEIC) is the global leader in wireless control technology for the connected home. UEIC designs, develops, and delivers innovative solutions that enable consumers to control entertainment devices, digital media, and home systems. The company’s broad portfolio of patented technologies and database of infrared control software have been adopted by many Fortune 500 companies in the consumer electronics, subscription broadcast, and computing industries. UEIC sells and licenses wireless control products through distributors and retailers under the One For All® brand name.

Sales Growth Forecast

A sales growth forecast of 10-12% seems reasonable and achievable for this still relatively smaller and faster-growing company.

Profitability Analysis

Valuation & Return Forecast

Value Line has a projected average P/E of 20x for their 3-5 year forecast. Based on a consensus that includes S&P, we’re using a P/E forecast of 18×.

Using the three main milestone judgments for UEIC, we arrive at a return forecast (projected annual return) of 16%.

The historical range for the return forecast (and quality rating) is shown in the company chronicle:

Universal Electronics (UEIC) was featured in our weekly memo nine months ago (4/23/2012) at a price of $16.85. From that message:

The highest ranked companies (by virtue of the combination characteristic of MANIFEST Rank that merges the return forecast with quality) are: Synchronoss Tech (SNCR), ITT Educational (ESI), Sysco (SYY), the company formerly known as Macrovision – ROVI (ROVI) and Universal Electronics (UEIC).

When it comes to the hierarchy of needs, we “get” the Sam Adams and peanut butter (popcorn too) part along with the caffeine … but the educational stuff seems to conflict with the video games for many of us, that is — unless your Facebook Friends list numbers in the hundreds and you’ve ventured in Doom or other Worlds of Warcraft, perhaps gaming with John Madden.

We’re relieved to see worlds collide with Universal Electronics because they are involved in what has become one of the most powerful needs (and means for couch potato domination of your living room) … the remote. Most of the young people in your life would have a whole lot of trouble imagining the pre-historic savagery of having to walk to the tube to change the channel. Try this at home and watch/hear the “unimaginable horrors” that our young people will share. “Right, Dad. Now you’re probably going to try to tell me that cars didn’t always have air conditioners!”

As for me, I’m grateful that our children are available to program the remote — saving me from the agony of reading the instruction manual and one of those challenging educational services opportunities as our young people bring those indispensable handheld devices to life.

UEIC has gained 13.5% over the last nine months while the Wilshire 5000 has advanced 11.3% for a relative return of +2.2%.

From → Stocks

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