Is UFP Technologies, Inc.'s (NASDAQ:UFPT) Recent Stock Performance Tethered To Its Strong Fundamentals? – Yahoo Finance
Most readers would already be aware that UFP Technologies’ (NASDAQ:UFPT) stock increased significantly by 12% over the past three months. Given the company’s impressive performance, we decided to study its financial indicators more closely as a company’s financial health over the long-term usually dictates market outcomes. Specifically, we decided to study UFP Technologies’ ROE in this article.
Return on equity or ROE is a key measure used to assess how efficiently a company’s management is utilizing the company’s capital. In simpler terms, it measures the profitability of a company in relation to shareholder’s equity.
See our latest analysis for UFP Technologies
The formula for ROE is:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders’ Equity
So, based on the above formula, the ROE for UFP Technologies is:
10% = US$21m ÷ US$207m (Based on the trailing twelve months to June 2022).
The ‘return’ is the yearly profit. That means that for every $1 worth of shareholders’ equity, the company generated $0.10 in profit.
Thus far, we have learned that ROE measures how efficiently a company is generating its profits. Depending on how much of these profits the company reinvests or “retains”, and how effectively it does so, we are then able to assess a company’s earnings growth potential. Assuming all else is equal, companies that have both a higher return on equity and higher profit retention are usually the ones that have a higher growth rate when compared to companies that don’t have the same features.
To begin with, UFP Technologies seems to have a respectable ROE. Further, the company’s ROE is similar to the industry average of 12%. This certainly adds some context to UFP Technologies’ moderate 12% net income growth seen over the past five years.
We then compared UFP Technologies’ net income growth with the industry and found that the company’s growth figure is lower than the average industry growth rate of 19% in the same period, which is a bit concerning.
Earnings growth is a huge factor in stock valuation. It’s important for an investor to know whether the market has priced in the company’s expected earnings growth (or decline). Doing so will help them establish if the stock’s future looks promising or ominous. What is UFPT worth today? The intrinsic value infographic in our free research report helps visualize whether UFPT is currently mispriced by the market.
UFP Technologies doesn’t pay any dividend, meaning that all of its profits are being reinvested in the business, which explains the fair bit of earnings growth the company has seen.
In total, we are pretty happy with UFP Technologies’ performance. Specifically, we like that the company is reinvesting a huge chunk of its profits at a high rate of return. This of course has caused the company to see a good amount of growth in its earnings. With that said, the latest industry analyst forecasts reveal that the company’s earnings are expected to accelerate. To know more about the company’s future earnings growth forecasts take a look at this free report on analyst forecasts for the company to find out more.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
Related Quotes
WSFS (WSFS) has been upgraded to a Zacks Rank #1 (Strong Buy), reflecting growing optimism about the company's earnings prospects. This might drive the stock higher in the near term.
Berry (NASDAQ:BRY) has had a great run on the share market with its stock up by a significant 15% over the last three…
Yahoo Finance Live anchors discuss the decline in stock for AMD after issuing preliminary third-quarter results.
Shares of tech giant Microsoft (NASDAQ: MSFT) fell hard today, down some 4.5% as of 12:30 p.m. ET. Microsoft is considered somewhat defensive by tech standards, so it was rare to see the stock down so much in a day. Last night, AMD pre-announced revenue for its September quarter, which came in far below expectations.
Insigneo CIO Ahmed Riesgo and Todd Sohn, Managing Director of Technical Strategy at Strategas, a Baird company, join Yahoo Finance Live to discuss the market outlook amid the Fed's interest rate hikes and recent employment data, and also talk about trading in volatile or recessionary periods.
Everyone knows that you should buy low and sell high if you want to turn a profit in the markets. The trick is finding the bottom, to know when to buy. Jim Cramer, the well-known host of CNBC’s ‘Mad Money’ program, sees the market bottom hitting in the next couple of weeks, making the end of October the right time for investors to buy in. Referring to some recent predictions by market technician Larry Williams, Cramer says, “The bear market is more or less… toast and, even if the current rally s
Seana Smith checks out several stocks and sectors trending in the after-hours trading session, including the semiconductor industry following President Biden's export restrictions on China.
Bank of America Senior Semiconductor Analyst Vivek Arya assesses the outlook of semiconductor stocks amid waning demand and export restrictions on China
The stock is down more than 12% so far this year and has a 52-week low of $18.89 and a 52-week high of $41.56. The stock slid when a federal judge pushed back a hearing until Jan. 5 regarding a lawsuit opposing the company's Thacker Pass lithium mine in Humboldt County in Nevada. Opponents of the mine are trying to get the court to overturn the mine's approval, set by then-President Donald Trump in January 2021.
Here are the markets that will be open on Columbus Day, also recognized as Indigenous Peoples' Day, on Monday, Oct. 10.
Tesla stock is forming a bearish head-and-shoulders pattern. And with CEO Elon Musk likely selling more stock to fund his Twitter purchase, shares of the electric-vehicle giant might have further to fall.
Shares of the Chinese electric vehicle company Nio (NYSE: NIO) hit the brakes today following the release of the latest U.S. jobs data. The Bureau of Labor Statistics said 263,000 jobs were added in September, indicating a strong labor market. Additionally, Nio received a price-target cut by an analyst yesterday, which could be weighing on the stock as well.
AMD stock is hitting 52-week lows as it reports disappointing preliminary revenue results. Here's when to buy the chipmaker's shares.
Verizon Communications Inc. stock is trending on the Yahoo Finance Platform. Here is a visualization of $VZ performance over time, how that performance compares to the wider industry, and analyst projections for the current quarter.Check out the ticker page here.
The chip sector melted down Friday for its third 6% one-day drop of the year after U.S. regulators moved to pump the brakes on China's military ambitions as it issued wider restrictions on semiconductor and AI technology that can be sold to the world's second-largest economy.
The message is simple. Be greedy when others are fearful.
J.P. Morgan’s Chair of Global Research Joyce Chang sits down with Yahoo Finance Live to talk about how markets are digesting September jobs report data, the state of the labor force participation rate, and how the Fed considers this data in its interest rate hikes.
Carnival (NYSE: CCL) (NYSE: CUK), the world's biggest cruise operator, is an example. Considering this extreme drop, it may be tempting to pick up a few Carnival shares. Carnival had it rough during the early days of the pandemic.
Semiconductor maker Advanced Micro Devices issued a third-quarter revenue warning Thursday after the close of trading. Let's check on the charts and indicators again. Our last review on September 27 was not encouraging.
Few people command the attention of Wall Street professionals and everyday investors quite like billionaire Warren Buffett. Since taking the reins of Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) in 1965, the Oracle of Omaha, as he's come to be known, has created more than $615 billion in value for shareholders and generated an aggregate return on his company's Class A shares (BRK.A) of 3,641,613%. In other words, there's plenty of reason for Wall Street and investors to pay attention to what Buffett is buying, selling, and holding.