CTS (CTS) Narrative Overview: Key Factors Driving Valuation

Correction: Previous versions of this article published on September 21st and 23rd incorrectly attributed an internet and broadband expansion program to CTS Corporation (NYSE:CTS). The program was undertaken by CTS Telecom (which was acquired by MetroNet in 2021). CTS Corporation is a separate and unrelated entity and was not involved in the program. We apologize for any confusion.

CTS is coming off a mixed year for shareholders. The stock is down about 19% in 2024 and lost 12% over the past twelve months, showing a steady, if not dramatic, drift lower. Over the past five years, though, CTS has provided a nearly ninefold return, so anyone holding long term has seen considerable upside. The company is also growing both revenue and profits annually, though the pace is steady rather than rapid.

Most Popular Narrative: 2.7% Undervalued

According to the most widely followed narrative, CTS is currently trading at a slight discount to its estimated fair value, hinting at a modest undervaluation based on analyst expectations for growth and profitability.

The company's continued diversification into high-growth end markets such as medical (with particular momentum in therapeutic and portable ultrasound applications) and industrial (with new wins in EV charging, automation, and connectivity solutions) positions CTS to benefit from the accelerating adoption of smart, connected, and electrified technologies. This supports sustained future revenue growth and an enhanced margin mix. Structural increases in automation, device connectivity, and industrial recovery (as reflected in significant bookings growth and new customer wins) support long-term demand for CTS's advanced sensing and control technologies and provide a catalyst for both top-line revenue expansion and margin improvement.

Want to know what really powers this valuation? Analysts are betting on a transformation fueled by new markets and advanced technology, but the financial details that check these assumptions might surprise you. Wondering about the growth rates and profit multiples that drive this number? Dig into the projections that make analysts see hidden value here.

Result: Fair Value of $43.00 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent weakness in transportation sales or renewed geopolitical tensions could pressure CTS’s growth outlook and challenge today's consensus valuation.

Find out about the key risks to this CTS narrative.

Another View: What Does the DCF Model Say?

While analyst consensus points to CTS being modestly undervalued, the SWS DCF model tells a different story. It suggests the current price might be higher than its intrinsic value. Which perspective is closer to reality?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day ( check out CTS for example ). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows . If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own CTS Narrative

If you see things differently or want to draw your own conclusions, you can piece together the story yourself in just a few minutes. Do it your way

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding CTS.

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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.

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