Most digital camera manufacturers upgrade a model by improving a component, adding a megapixel or two, or throwing in a trendy new feature. Panasonic included all three upgrades in the Lumix DMC-FZ18. It has 8.1 megapixels, an 18x optical zoom lens, and face detection – attributes its predecessor, the 7.2-megapixel, 12x zoom FZ8, does not have. The Panasonic FZ18 is a vast improvement from the FZ8 and, at $399, sells for $50 more.

The Panasonic FZ18 easily outperforms the FZ8 in the highly competitive field of ultra-zoom cameras. The Sony Cyber-shot H7 is the best performing camera we have tested this year, and the Canon PowerShot S5 IS and Olympus SP-550UZ aren’t far behind. Our image quality tests show the Panasonic Lumix FZ18 is a worthy contender.

Its 8-megapixel resolution is fantastic, as is its color accuracy and Movie mode. At ISO 100, the camera’s noise levels and dynamic range challenge any point-and-shoot on the market. On the downside, the camera has autofocus problems that are evident when shooting in low light, as well as disappointing white balance accuracy that may negate its excellent color accuracy. It isn’t perfect, but the Panasonic FZ18 is a high performer.

At 3 x 4.6 x 3.5-inches, the FZ18 is shaped like an SLR and handles like one, with a rubber-like hand grip. Despite its advanced-looking body, however, the camera is easy to use.

The Panasonic FZ18 has a quality set of components headlined by its Leica-branded 18x optical zoom lens. The 28-504mm (35mm equivalent) zoom lens is wide enough to snap a picture of the whole soccer team and long enough to snap the game-winning goal from across the field. The FZ18’s lens’s range is the same as the Olympus SP-550UZ, but not quite as wide as the 27-486mm Olympus SP-560UZ. The Fujifilm FinePix S8000fd is the only other 18x camera on the market, and it also has a slightly wider 27-486mm focal range. The FZ18’s lens is complemented by an optical image stabilization system.

Above the FZ18’s lens is a pop-up flash that provides even lighting up to nearly 20 feet in front of the camera. At the back is a 0.44-inch electronic viewfinder that is larger than competing models, but has less resolution at 188,000 pixels. The Sony H9 has a 0.2-inch viewfinder with 201,000 pixels. Unfortunately, the LCD screen’s resolution isn’t much better. The 2.5-inch LCD has 207,000 pixels, equal to the Canon S5 but inferior to the 230,000-pixel version on the Sony H9 and Fuji S8000fd.

This Lumix has a big mode dial that flaunts its expansive range of exposure modes, from Manual and Priority modes to the Intelligent Auto and Scene modes. There are plenty of manual controls like white balance adjustment, flash exposure control, RAW and JPEG shooting, and a 100 to 1600 ISO range. It also packs in face detection, something the older FZ8 does not have. According to Panasonic, the technology can recognize up to 15 faces and adjust the exposure and focus according to the lighting on them.

In our imaging lab, the Movie mode tests very well. Subjects are properly exposed and motion looks nice and smooth. The FZ18 can record videos at television-quality 640 x 480 pixels or a widescreen-optimized 848 x 480 pixels, both at 30 frames per second (fps). The only drawback to the Movie mode is the optical zoom lens doesn’t work while recording, a common flaw on compact cameras but something more and more ultra-zooms are now including. The Sony H9’s 15x lens and Canon S5’s 12x lens are functional while shooting movies. The Olympus SP-560UZ allows the zoom to work only when the audio is turned off, so it isn’t much more desirable than the Panasonic FZ18 – especially when performance is considered.

In the end, the Panasonic Lumix DMC-FZ18 is worth the $399 price. It performs extremely well in our lab testing and supplies impressive components paired with useful and trendy features.