Medical products company UFP Technologies (NASDAQ:UFPT) reported Q1 CY2025 results topping the market’s revenue expectations, with sales up 41.1% year on year to $148.1 million. Its non-GAAP profit of $2.47 per share was 22.9% above analysts’ consensus estimates.
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UFP Technologies (UFPT) Q1 CY2025 Highlights:
- Revenue: $148.1 million vs analyst estimates of $139.9 million (41.1% year-on-year growth, 5.9% beat)
- Adjusted EPS: $2.47 vs analyst estimates of $2.01 (22.9% beat)
- Adjusted EBITDA: $30.24 million vs analyst estimates of $28.26 million (20.4% margin, 7% beat)
- Operating Margin: 15.6%, in line with the same quarter last year
- Market Capitalization: $1.52 billion
“I am very pleased with our first quarter results and continued progress on a number of key strategic fronts,” said R. Jeffrey Bailly, Chairman & CEO.
Company Overview
With expertise dating back to 1963 in specialized materials and precision manufacturing, UFP Technologies (NASDAQ:UFPT) designs and manufactures custom solutions for medical devices, sterile packaging, and other highly engineered products for healthcare and industrial applications.
Sales Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, UFP Technologies grew its sales at an excellent 24.2% compounded annual growth rate. Its growth beat the average healthcare company and shows its offerings resonate with customers.
Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. UFP Technologies’s annualized revenue growth of 20% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. 
This quarter, UFP Technologies reported magnificent year-on-year revenue growth of 41.1%, and its $148.1 million of revenue beat Wall Street’s estimates by 5.9%.
Looking ahead, sell-side analysts expect revenue to grow 9.1% over the next 12 months, a deceleration versus the last two years. Still, this projection is admirable and implies the market is baking in success for its products and services.
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Operating Margin
Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
UFP Technologies has done a decent job managing its cost base over the last five years. The company has produced an average operating margin of 14.2%, higher than the broader healthcare sector.
Analyzing the trend in its profitability, UFP Technologies’s operating margin rose by 7 percentage points over the last five years, as its sales growth gave it operating leverage. Zooming in on its more recent performance, we can see the company’s trajectory is intact as its margin has also increased by 2.8 percentage points on a two-year basis.
In Q1, UFP Technologies generated an operating profit margin of 15.6%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
UFP Technologies’s EPS grew at an astounding 28.1% compounded annual growth rate over the last five years, higher than its 24.2% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
Diving into UFP Technologies’s quality of earnings can give us a better understanding of its performance. As we mentioned earlier, UFP Technologies’s operating margin was flat this quarter but expanded by 7 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.
In Q1, UFP Technologies reported EPS at $2.47, up from $1.66 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects UFP Technologies’s full-year EPS of $9.18 to stay about the same.
Key Takeaways from UFP Technologies’s Q1 Results
We were impressed by how significantly UFP Technologies blew past analysts’ revenue, EPS, and EBITDA expectations this quarter. Zooming out, we think this quarter featured some important positives. The stock traded up 7% to $210.96 immediately following the results.
UFP Technologies had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.