CTS Corp (CTS, Financial) has recently experienced a notable uptick in its stock price, with an 8.41% gain over the past week and a 12.96% gain over the past three months. The company's market capitalization now stands at $1.43 billion, with the current stock price at $45.91. This recent performance has brought the stock to a valuation that GuruFocus deems as fairly valued, with a GF Value of $44.09, up from a past GF Value of $43.13. Previously considered modestly undervalued, CTS Corp's stock has seen a positive adjustment aligning closer to its intrinsic value.
Understanding CTS Corp's Business
CTS Corp operates within the competitive electronics industry, specializing in the manufacturing of sensors, electronic components, and actuators. The company's products are integral to a wide range of markets, including aerospace, defense, industrial, IT, medical, telecommunications, and transportation. With a strong presence in the United States and operations extending to China, Singapore, the Czech Republic, Taiwan, and other countries, CTS Corp has established itself as a key player in its sector.
Profitability Analysis
CTS Corp's financial health is reflected in its impressive Profitability Rank of 7/10. The company's Operating Margin stands at 15.31%, outperforming 87.72% of 2,451 companies in the industry. Additionally, CTS Corp's ROE is at 11.77%, ROA at 8.04%, and ROIC at 13.31%, each surpassing the majority of their industry counterparts. These figures not only demonstrate the company's ability to generate profits but also its efficiency in utilizing its equity, assets, and invested capital. Over the past decade, CTS Corp has maintained profitability for eight years, indicating a consistent performance.
Growth Prospects
Despite its strong profitability, CTS Corp's Growth Rank is relatively low at 2/10. However, the company has shown positive growth rates, with a 3-Year Revenue Growth Rate per Share of 8.70% and a 5-Year Revenue Growth Rate per Share of 6.20%. The 3-Year EPS without NRI Growth Rate is even more impressive at 14.90%. These growth metrics suggest that while CTS Corp may not be the fastest-growing company in its industry, it has been steadily increasing its revenue and earnings per share over time.
Influential Shareholders
Notable investors have taken an interest in CTS Corp, with Mario Gabelli (Trades, Portfolio) holding 1,389,159 shares, representing 4.46% of the company. Chuck Royce (Trades, Portfolio) and Jim Simons (Trades, Portfolio) also have significant stakes, with 307,065 shares (0.99%) and 146,300 shares (0.47%), respectively. The involvement of these prominent investors may provide additional confidence to the market, potentially influencing the stock's performance.
Competitive Landscape
When compared to its competitors, CTS Corp holds its ground with a market cap of $1.43 billion. TTM Technologies Inc (TTMI, Financial) has a slightly higher market cap at $1.48 billion, while Benchmark Electronics Inc (BHE, Financial) and Vicor Corp (VICR, Financial) have market caps of $1.05 billion and $1.7 billion, respectively. This places CTS Corp in a competitive position within the industry, with a market cap that reflects its solid market presence.
Conclusion
In summary, CTS Corp's recent stock price surge can be attributed to its fair valuation, consistent profitability, and steady growth. The company's strong operating margin, ROE, ROA, and ROIC indicate a robust financial foundation, while its growth rates in revenue and EPS suggest a promising future. The confidence shown by significant shareholders like Mario Gabelli (Trades, Portfolio), Chuck Royce (Trades, Portfolio), and Jim Simons (Trades, Portfolio) may also play a role in the stock's performance. Although facing stiff competition, CTS Corp's market cap comparison shows it is a formidable player in the hardware industry. Investors should keep an eye on CTS Corp as it continues to navigate the dynamic electronics market.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
