Was UFP Technologies, Inc.'s (NASDAQ:UFPT) Earnings Growth Better Than The Industry's?
In this article, I will take a look at UFP Technologies, Inc.'s (NasdaqCM:UFPT) most recent earnings update (31 December 2019) and compare these latest figures against its performance over the past few years, along with how the rest of UFPT's industry performed. As a long-term investor, I find it useful to analyze the company's trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.
Check out our latest analysis for UFP Technologies
Commentary On UFPT's Past Performance
UFPT's trailing twelve-month earnings (from 31 December 2019) of US$20m has jumped 38% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 22%, indicating the rate at which UFPT is growing has accelerated. What's the driver of this growth? Well, let’s take a look at if it is merely a result of an industry uplift, or if UFP Technologies has experienced some company-specific growth.
In terms of returns from investment, UFP Technologies has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. However, its return on assets (ROA) of 11% exceeds the US Packaging industry of 5.4%, indicating UFP Technologies has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for UFP Technologies’s debt level, has increased over the past 3 years from 8.9% to 14%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 3.0% to 0.2% over the past 5 years.
What does this mean?
Though UFP Technologies's past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as UFP Technologies gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research UFP Technologies to get a more holistic view of the stock by looking at:
Financial Health: Are UFPT’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Valuation: What is UFPT worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether UFPT is currently mispriced by the market.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2019. This may not be consistent with full year annual report figures.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
