The total return for UFP Technologies (NASDAQ:UFPT) investors has risen faster than earnings growth over the last five years

It hasn't been the best quarter for UFP Technologies, Inc. (NASDAQ:UFPT) shareholders, since the share price has fallen 27% in that time. But over five years returns have been remarkably great. In fact, during that period, the share price climbed 303%. Impressive! Arguably, the recent fall is to be expected after such a strong rise. Only time will tell if there is still too much optimism currently reflected in the share price.

While this past week has detracted from the company's five-year return, let's look at the recent trends of the underlying business and see if the gains have been in alignment.

View our latest analysis for UFP Technologies

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During five years of share price growth, UFP Technologies achieved compound earnings per share (EPS) growth of 26% per year. So the EPS growth rate is rather close to the annualized share price gain of 32% per year. This indicates that investor sentiment towards the company has not changed a great deal. Rather, the share price has approximately tracked EPS growth.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

It is of course excellent to see how UFP Technologies has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling UFP Technologies stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

We're pleased to report that UFP Technologies shareholders have received a total shareholder return of 31% over one year. However, the TSR over five years, coming in at 32% per year, is even more impressive. It's always interesting to track share price performance over the longer term. But to understand UFP Technologies better, we need to consider many other factors. For example, we've discovered 1 warning sign for UFP Technologies that you should be aware of before investing here.

But note: UFP Technologies may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

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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.