This small-cap's future looks bright, so I'd buy on today's results

It seems to me that MacFarlane Group (LSE: MACF) could be trading in the right sector at the right time. The firm reckons it is the UK market leader in the distribution of packaging for consumable products for companies operating in the logistics, mail order, internet retail and industrial markets. The company also designs, manufactures and assembles "bespoke" packaging solutions to the electronics, aerospace and medical sectors and designs and prints self-adhesive and resealable labels for customers dealing in fast-moving consumer goods in the UK, Europe and the USA.

A steady financial record

Sure enough, there's a good record of steady growth in revenue, earnings and operating cash flow over the past few years. The firm's efficient execution seems to have driven that good financial outcome. But there's also been a powerful wave of demand in the industry, I reckon. We've seen rampant consumption of goods in recent decades and a trend towards extra packaging for goods, which can only have helped the firm to flourish.

With today's half-year report, the good news continues and the stock is up around 5% as I write. Revenue moved 14% higher than the equivalent period a year ago and diluted earnings per share shot up 19%. The directors underlined their confidence in the outlook by pushing up the interim dividend by 8%.

MacFarlane's trading has a second-half bias and the directors expect a seasonal uplift from the e-commerce sector to produce strong cash generation, which gives them confidence that the firm will achieve full-year expectations for 2018. City analysts following the firm predict that earnings will shoot up 32% this year and 6% in 2019, which suggests the firm's growth objectives remain on track.

Organic and acquisitive growth

Chairman Stuart Paterson explained in today's report that MacFarlane's future performance depends on efforts to "grow sales, increase efficiencies and bring high-quality acquisitions into the Group." And the acquisition programme looks vibrant with the firm signing off two bolt-ons since the end of the period at a cost of around £3.5m. Tyler packaging and Harrisons Packaging are both successful companies and will now be integrated into the firm's operations to contribute to future cash inflows.

Looking forward, Mr Paterson is confident of a good outcome for 2018. The firm's growth strategy involves aiming to build strong, sustainable long-term customer relationships in the key growth sectors of the packaging and labels markets. Product design, good value, flexibility and product diversification will all feature in the firm's efforts to stay ahead of the game - the meat and veg of most successful enterprises.

Meanwhile, I think the firm's financial consistency makes this stock well worth your further consideration. To me, MacFarlane's future looks bright. At today's share price around 106p, you can pick up a few of the shares on a forward price-to-earnings ratio of just over 14 for 2019 and the forward dividend yield sits around 2.3%. I reckon that's good value given the quality of the enterprise.

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Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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