Women and Babies First: Utah Medical Products (UTMD)

Utah Medical has grown through acquisitions as well as new products. The company has been well managed, with superior profitability (profit margins and return on investment) relative to its industry peers and to the overall stock market. It has generated more cash than is needed in its normal business operations, which allows for acquisitions of other products or entire companies. Its balance sheet is strong, with cash exceeding outstanding debt. 

UTAH MEDICAL PRODUCTS

Despite these attributes, the stock is almost completely overlooked by Wall Street—only one analyst follows the company. We like that, as it leaves room for a wider audience and potentially greater demand for the stock.

Though recent financial results have been constrained by the new medical devices tax in the U.S., we like the long-term prospects of this niche medical devices company. Our price target for the stock is $60 over the next twelve months.

Sustainability Profile

UTMD’s business conduct has been exemplary in avoiding product quality and sales practice controversies that have tripped up many leading companies in the health care sector.

This small company (only 180 employees) has impressive governance characteristics, including relatively modest compensation for its top executives, stability at the top with the CEO serving for more than 20 years, and only five members of the board of directors, which keeps things simple and holds costs down.

Not unexpectedly for a microcap, the company has no apparent sustainability policy.

 

Revenues: $40 million  
Earnings Per Share (EPS):           
  2014E  $3.16                                
  2015E  $3.39 

Projected 3–5-Year Annual Earnings Growth: 10%
Dividend Yield: 2%
52-Week Low – High: $42.28 – $64.84

Risk: Moderate                          

Website: www.UtahMed.com