Medical products company UFP Technologies (NASDAQ: UFPT) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 6.5% year on year to $154.6 million. Its non-GAAP profit of $2.39 per share was 10% above analysts’ consensus estimates.

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“I am pleased with our third quarter results and continued progress with our strategic initiatives,” said R. Jeffrey Bailly, Chairman and 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

A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, UFP Technologies’s 26.5% annualized revenue growth over the last five years was exceptional. Its growth beat the average healthcare company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. UFP Technologies’s annualized revenue growth of 23.9% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.

This quarter, UFP Technologies reported year-on-year revenue growth of 6.5%, and its $154.6 million of revenue exceeded Wall Street’s estimates by 3.3%.

Looking ahead, sell-side analysts expect revenue to grow 6.8% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is above average for the sector and suggests the market sees some success for its newer products and services.

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Operating Margin

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after subtracting all core expenses, like marketing and R&D.

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 14.7%, higher than the broader healthcare sector.

Looking at the trend in its profitability, UFP Technologies’s operating margin rose by 4.7 percentage points over the last five years, as its sales growth gave it operating leverage.

This quarter, UFP Technologies generated an operating margin profit margin of 15.1%, down 2.6 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

UFP Technologies’s EPS grew at an astounding 37.1% compounded annual growth rate over the last five years, higher than its 26.5% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into UFP Technologies’s quality of earnings can give us a better understanding of its performance. As we mentioned earlier, UFP Technologies’s operating margin declined this quarter but expanded by 4.7 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 Q3, UFP Technologies reported adjusted EPS of $2.39, in line with 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 8.4%.

Key Takeaways from UFP Technologies’s Q3 Results

We enjoyed seeing UFP Technologies beat analysts’ revenue expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. Zooming out, we think this was a solid print. The stock remained flat at $200 immediately after reporting.

UFP Technologies had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.