CTS (CTS) Valuation Check as Sales and Earnings Slide for a Second Year

CTS (CTS) has drifted back into the spotlight as two years of slipping sales and earnings, roughly 3% annually on both, force investors to reassess how durable its sensor and actuator franchise really is.

See our latest analysis for CTS.

Even so, the recent 90 day share price return of 7.46% at a $44.52 share price contrasts with a 1 year total shareholder return of negative 19.74%. This hints that near term momentum is improving even as longer term holders remain underwater.

If CTS’s mixed trend has you rethinking your exposure, this could be a good moment to explore aerospace and defense stocks as alternative plays in similar end markets.

With revenues and earnings shrinking but the share price showing early signs of life, is CTS now trading below its true potential, or is the market already factoring in any realistic rebound in growth?

Most Popular Narrative: 5.3% Undervalued

With CTS last closing at $44.52 against a most popular narrative fair value of about $47, the story frames the stock as modestly mispriced, leaning on steady growth and disciplined capital returns.

Ongoing investment in next-generation sensor and actuator development, alongside the strategic movement up the value chain from component supplier to solutions provider in areas like aerospace/defense, enables CTS to command premium pricing and supports gross margin expansion.

Read the complete narrative.

Want to see what justifies this higher value? The narrative leans on measured revenue growth, sturdier margins, and a future earnings multiple that quietly bakes in rising profitability. Curious how those moving parts add up to that fair value line? Dive in to unpack the full set of assumptions behind this outlook.

Result: Fair Value of $47 (UNDERVALUED)

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

However, persistent transportation softness and intensifying competition, particularly from Chinese OEMs, could undermine the margin gains and growth built into this upbeat view.

Find out about the key risks to this CTS narrative.

Another View: Multiple Based Tension

Look past the 5.3% undervalued narrative and the picture shifts. CTS trades on a 21.6x earnings multiple, cheaper than the US Electronic industry at 24.7x and peers at 56x, yet above its 20.1x fair ratio. This hints at some valuation risk if sentiment cools.

See what the numbers say about this price — find out in our valuation breakdown.

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 915 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 the story differently or want to dig into the numbers yourself, you can build a custom narrative in just minutes with Do it your way.

A good starting point is our analysis highlighting 3 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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