Call of the Week: When Packaging is Everything

Robert Maltbie |

This week's top idea at Singular Research is UFP Technologies, Inc. (UFPT), a producer of innovative custom-engineered components, products, and specialty packaging. Singular currently has a 12-month price target of $23.00 per share on the company, representing upward potential of about 40 percent based on its current trading price of about $16. We have a buy rating on UFP.

Investment highlights include:

  • Q1 revenues rose to $32.0 million from $31.5 million in Q1:11. However, excluding $1.8 million in door panel sales from Q1:11 results, we estimate revenues were up about 7.6%. We had forecast revenues of $31.4 million.
  • UFPT saw strength in all end-use markets with the exception of automotive, with particular strength in medical (+$0.5 million) and molded fiber packaging (+$1.0 million).
  • Gross margin rose 90 bps to 28.8% from 27.9% and was nicely above our 27.7% estimate with the improvement attributed to a better mix of business.
  • SG&A expense fell 90 bps to 17.3% of revenues, 100 bps below our 18.3% estimate as expenses declined by $0.2 million due to lower professional fees while revenues rose $0.5 million.
  • Operating profit excluding asset sale gains rose to $3.7 million or 11.5% of revenues from $3.1 million, or 9.8% of revenues.
  • Net income rose 6.5% to $2.35 million from $2.21 million while EPS growth of 3.1% to $0.33 from $0.32 in Q1:11 was lower due to the increase in diluted shares. Consensus (two estimates) was $0.31 and we were at $0.28. Excluding a $0.04 gain from an asset sale in Q1:11, EPS from operations were up 17.8%.
  • We are maintaining our BUY rating and $23.00 price target and increase our estimates (2012 - $1.50 vs. $1.45) and (2013 - $1.65 vs. $1.63) on the heels of the better-than-expected Q1 performance.

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Singular Research

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:


Symbol Name Price Change % Volume
UFPT UFP Technologies Inc. 26.55 0.20 0.76 15,414


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