UFPT Stock Study (3-6-26)

I recently did a stock study on UFP Technologies Inc. (UFPT, $201.36).

M* writes:

     > UFP Technologies Inc is a contract development and manufacturing
     > organization that specializes in single-use and single-patient
     > medical devices. The company manufactures its products by
     > converting raw materials using laminating, molding, radio
     > frequency, and impulse welding, and fabricating manufacturing
     > techniques. It is an important link in the medical device supply
     > chain and a valued outsource partner to many of the top medical
     > device manufacturers in the world. The company’s single-use and
     > single-patient devices and components are used in a wide range of
     > medical devices, disposable wound care products, infection
     > prevention, minimally invasive surgery, wearables, orthopedic
     > soft goods, and orthopedic implant packaging.

Over the past decade, this small-size company grows sales and EPS at annualized rates of 17.7% and 26.7%, respectively. Lines are mostly up, straight, and parallel except for sales+EPS decline in ’20. Five- (10-) year EPS R^2 is 0.81 (0.89) and Value Line (VL) gives an Earnings Predictability score of 60. Shares outstanding increase 6.8% (0.7%/year).

Over the past decade, PTPM leads peer averages but trails the industry despite increasing from 8.4% to 13.7% (’25) with a last-5-year mean of 13.4%. ROE leads peer averages and is even with the industry while increasing from 7.1% to 16.7% (’25) with a last-5-year mean of 15.5%. Debt-to-Capital is less than peer and industry averages despite increasing from 0.8% to 26.7% (’25) with a last-5-year mean of 26.1%.

Quick Ratio is 1.4 and Interest Coverage 9.4 per M* who assigns “Narrow” [quantitative] Economic Moat and a B grade for Financial Health (BetterInvesting® website). VL rates the company B+ for Financial Strength.

With regard to sales growth:

• YF gives YOY ACE 6.0% and 5.7% for ’26 and ’27 (based on 4 analysts).
• Zacks gives YOY ACE 6.5% and 5.7% for ’26 and ’27, respectively (3 analysts).
• CFRA gives ACE 6.2% YOY and 5.9% per year for ’26 and ’25-’27, respectively (4).

I am forecasting below the range at 4.0% per year.

With regard to EPS growth:

• MarketWatch projects 10.5% YOY and 11.4% per year for ’26 and ’25-’27, respectively (based on 4 analysts).
• Nasdaq.com gives ACE 11.6% YOY for ’27 (3 analysts).
• YF gives YOY ACE 4.9% and 11.8% for ’26 and ’27, respectively (4).
• Zacks gives YOY ACE 4.5% and 11.6% for ’26 and ’27, respectively (3).
• VL gives ACE 14.3% annualized from 2024 to 2026 / 2027 (3).
• CFRA gives ACE 17.0% YOY and 14.4% per year for ’26 and ’25-’27, respectively (4).

Analyst estimates are scant with VL providing the longest-term estimate at only 2.5 years out. My 7.0% forecast is near bottom of the short- and longer-term range. Initial value is ’25 EPS of $8.75/share.

My Forecast High P/E is 26.0. Over the past 10 years, high P/E increases from 25.0 to 33.1 (’25) with a last-5-year mean of 35.2 and last-5-year-mean average P/E of 26.6. I am below the range.

My Forecast Low P/E is 13.0. Over the past 10 years, low P/E ranges from 10.3 in ’22 to 21.1 in ’21 with a last-5-year mean of 17.9. I am forecasting near bottom of the range [only ’22 and ’19 (10.6) are less].

My Low Stock Price Forecast (LSPF) is $140.00. Default ($114.10) given initial value from above seems unreasonably low at 43.3% less than previous close and 36.0% less than 52-week low. My [arbitrary] selection is 30.5% and 21.5% less, respectively (and results in an effective Forecast Low P/E of 16.0).

These inputs land UFPT in the HOLD zone with a U/D ratio of 1.9. Total Annualized Return (TAR) is 9.6%.

PAR (using Forecast Average—not High—P/E) of 3.5% is less than I seek for a small-size company. If a healthy margin of safety (MOS) anchors this study, then I can proceed based on TAR instead.

To assess MOS, I compare my inputs with Member Sentiment (MS). Based on 70 studies done in the past 90 days (my study and 38 other outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 13.2%, 12.8%, 30.0, and 17.3 respectively. I am lower across the board.

MS high / low EPS are $15.68 / $8.63 vs. $12.27 / $8.75 (per share). My high EPS is less due mainly to a lower growth rate.

MS LSPF of $155.30 implies a Forecast Low P/E of 18.0: greater than the above-stated 17.3. MS LSPF is 4.0% greater than the default $8.63/share * 17.3 = $149.30 that results in more aggressive zoning. MS LSPF is also 10.9% greater than mine.

MOS is robust in the study because my inputs are [near or] less than [bottom of] historical/analyst/MS averages/ranges. Also backing this assessment is MS TAR exceeding mine by 5.9% per year and my lower LSPF.

Regarding valuation, PEG is 3.1 per my projected P/E: overvalued. Relative Value [(current P/E) / 5-year-mean average P/E] is slightly low at 0.86. M* says stock trades at a 9% discount.

Per U/D, UFPT is a BUY under ~$185/share. BetterInvesting® TAR criterion would be met [319.1 / ((14.87 / 100 ) +1 ) ^ 5] ~ $160 given a forecast high price ~$319 (no dividend).

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