UFP Technologies, Inc. (NasdaqCM: UFPT) posted record results in the last quarter after growing through acquisition and organically.

Company Description

UFP Technologies makes protective packaging of fabricated foams, plastics and other materials. Customers are in the medical, auto, electronics and other markets.

Record-Setting Quarter

On Aug 3 UFP Technologies reported its best second quarter yet. Sales came in at a company record of $30 million, up 43% year over year from $21 million. Net income was $2.3 million, up from $0.57 million a year ago.

Earnings were 34 cents on a per share basis, up from just 9 cents in the same period in 2009. Wall Street was expecting 28 cents, making last quarter the fourth consecutive earnings surprise for UFP Technologies.

Widespread Growth

UFP Technologies said that half of the jump in sales is attributable to the recent acquisitions, but the remainder is from organic growth in the medical, auto and industrial markets.

As we typically see following a tough economic period, companies are running leaner, which leads to a much higher increase in earnings.

Analyst Reaction

We only have 1 analyst reporting estimates. The full-year estimate for 2010 jumped 7 cents to $1.12. Next year's forecast is up 5 cents to $1.21. If met the growth rates will be 30% and 8%, respectively.

Industry Comparison

UFP Technologies is operating much more efficiently than its peers right now. The company has a net profit margin of 7.6%, ahead of the industry average 5.8%. The return on equity of 21% easily trumps the 12% that its peers are averaging.

Shares are also trading with good valuations. One share is running less than 9 times forward earnings. The price to book is around 1.4 times.

The Chart

UFP Technologies can be volatile, so you should use caution moving forward, but the recent trend has the stock moving higher.

Bill Wilton is the Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Growth Trader service

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