Medical products company UFP Technologies (NASDAQ: UFPT) met Wall Street’s revenue expectations in Q2 CY2025, with sales up 37.2% year on year to $151.2 million. Its non-GAAP profit of $2.50 per share was 11.1% above analysts’ consensus estimates.

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“I am very pleased with our Q2 results,” 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.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Luckily, UFP Technologies’s sales grew at an excellent 25.3% compounded annual growth rate over the last five years. 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 23.5% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.

This quarter, UFP Technologies’s year-on-year revenue growth of 37.2% was wonderful, and its $151.2 million of revenue was in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 5.5% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is above average for the sector and indicates the market is forecasting some success for its newer products and services.

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Operating Margin

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 14.5%, higher than the broader healthcare sector.

Analyzing the trend in its profitability, UFP Technologies’s operating margin rose by 5.6 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 1.4 percentage points on a two-year basis.

In Q2, UFP Technologies generated an operating margin profit margin of 16.1%, down 1.3 percentage points year on year. This reduction is quite minuscule and 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 32.8% compounded annual growth rate over the last five years, higher than its 25.3% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into UFP Technologies’s earnings to better understand the drivers of its performance. As we mentioned earlier, UFP Technologies’s operating margin declined this quarter but expanded by 5.6 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q2, UFP Technologies reported adjusted EPS at $2.50, up from $1.86 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 $9.82 to grow 1.6%.

Key Takeaways from UFP Technologies’s Q2 Results

It was encouraging to see UFP Technologies beat analysts’ EPS expectations this quarter. On the other hand, its revenue was in line. Overall, this print had some key positives. The market seemed to be hoping for more, and the stock traded down 2.5% to $220.50 immediately following the results.

So do we think UFP Technologies is an attractive buy at the current price? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.