UEIC

Universal Electronics($UEIC) Director Buys 24,000 Shares Following CEO Change as Stock Rebounds 50%

05/13/2025 22:37

Universal Electronics Inc ($UEIC) Director Eric Singer has made a significant stock purchase on May 13, acquiring 24,000 shares at an average price of $6.73, totaling approximately $161,609. This purchase comes at a time when the company's stock has declined by approximately 46.95% over the past year, and notably follows recent strategic shifts within the organization. Specializing in home entertainment control products and smart home devices, $UEIC had seen its stock price languishing around $4 until early May, before surging over 50% in the past week to reach $6.68. This remarkable rebound appears closely tied to significant corporate changes announced on May 5, when the company entered into a cooperation agreement with investment fund Kent Lake Partners and simultaneously announced the retirement of long-time CEO Paul D. Arling, with Bryan M. Hackworth assuming the role of principal executive officer. It's worth noting that former CEO Arling sold a total of 26,005 shares (approximately $300,000) in two separate transactions last December, at prices ranging from $11.38 to $11.73 per share—significantly higher than current levels. Following these sales, the company's stock experienced a prolonged decline, particularly after February's earnings announcement, eventually falling below $5 in early April. Examining $UEIC's financial performance, the company reported Q1 2025 revenue of $92.33 million, a slight 0.5% increase year-over-year, with an adjusted loss of $0.12 per share, better than the expected loss of $0.15. Notably, the connected home segment showed impressive growth of 31% year-over-year, reaching $31.7 million, while the traditional home entertainment division declined by 11% to $60.6 million. With a market capitalization of approximately $68.31 million, this small-cap company continues to face profitability challenges, posting a net loss of $24.03 million over the trailing twelve months, with a profit margin of -6.09%. However, operational cash flow has improved, generating $9 million in the first quarter. Singer's purchase, coming immediately after the cooperation agreement with Kent Lake Partners, signals confidence in the company's new direction and management team. According to SEC filings, this transaction was not part of a pre-planned 10b5-1 trading plan but rather a discretionary decision by the director. Industry analysts point out that $UEIC trades at just 0.22 times sales and 0.59 times book value, suggesting significant undervaluation. The average analyst price target stands at $14.00, implying potential upside of over 100% from current levels. The company's growth prospects largely depend on expansion in the connected home segment. For Q2, management has provided revenue guidance of $91.0-101.0 million and expects to return to adjusted profitability with EPS of $0.05-$0.15. Recent product development collaborations with Somfy are anticipated to serve as growth catalysts. Investors should consider whether Singer's purchase represents simple bargain hunting or genuine confidence in a fundamental turnaround. Attention should also be paid to how the new management team's strategic direction and the partnership with Kent Lake Partners might create synergies. While the stock has surged in the short term, it remains at less than half its level from a year ago, suggesting potential for further recovery according to some market observers.

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