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1. Company Snapshot

1.a. Company Description

CTS Corporation manufactures and sells sensors, actuators, and connectivity components in North America, Europe, and Asia.The company provides sensors and actuators for use in passenger or commercial vehicles; connectivity components for telecommunications infrastructure, information technology, and other high-speed applications; switches, temperature sensors, and potentiometers supplied to multiple markets; and fabricated piezoelectric materials and substrates used primarily in medical, industrial, aerospace and defense, and information technology markets.In addition, the company sells and markets its products through its sales engineers, independent manufacturers' representatives, and distributors.


CTS Corporation was founded in 1896 and is headquartered in Lisle, Illinois.

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1.b. Last Insights on CTS

The recent 3-month performance of CTS Corporation was negatively impacted by a lack of significant earnings growth and a decline in revenue. The company's Q4 2024 earnings release revealed a modest 2.5% year-over-year increase in revenue, which fell short of analyst expectations. Furthermore, the absence of any notable acquisitions or new product launches during this period contributed to the company's stagnant growth. Additionally, the recent earnings release did not provide any significant guidance on future growth prospects, exacerbating investor concerns.

1.c. Company Highlights

2. Strong Q3 Earnings with Diversified Growth

The company delivered a robust third quarter with sales reaching $143 million, up 8% from $132 million in the same period last year. Diversified end market sales, including medical, aerospace, and defense, and industrial, were up 22% and accounted for 59% of overall company revenue. Gross margin expanded by 66 basis points to 38.9%, driven by operational execution. Adjusted EBITDA was 23.8% in the quarter. Earnings per share (EPS) came in at $0.6, slightly below estimates of $0.61.

Publication Date: Nov -24

📋 Highlights
  • Strong Diversified Market Growth:: Diversified end markets (medical, aerospace/defense, industrial) grew 22% YoY, contributing 59% of total revenue.
  • Gross Margin Expansion:: Adjusted gross margin reached 38.9%, a 66 bps increase YoY, driven by operational efficiencies.
  • SyQwest Defense Contract:: Secured a $5M sole-source naval defense contract with potential for additional platform awards in 12 months.
  • Industrial Recovery Momentum:: Industrial sales rose 21% YoY and 9% sequentially, with bookings up 29% due to key wins in printing and heat pump applications.
  • Revised Full-Year Guidance:: Sales guidance narrowed to $535–545M, with adjusted EPS projected at $2.20–$2.25, reflecting confidence in market conditions.

Segment Performance

Medical sales saw a significant increase of 22% compared to the prior year period, with bookings up 8%. Aerospace and defense sales were also up 23%, driven by the SyQwest team's award of a sole-source naval defense contract. Industrial sales recovered with a 9% sequential increase and a 21% year-over-year increase, underscoring the expectation of continued recovery. Transportation sales, however, were down 7% due to softness in commercial vehicle products.

Guidance and Outlook

The company narrowed its guidance for sales to the range of $535 million to $545 million and adjusted diluted EPS to be in the range of $2.20 to $2.25, assuming the continuation of current market conditions. The management is positive about the trend in diversified end markets, including medical, aerospace, and defense. SyQwest is expected to maintain its momentum, with potential additional platform awards within the next 12 months.

Valuation

With a P/E Ratio of 20.97 and an EV/EBITDA of 10.94, the stock seems reasonably valued. The ROE of 10.93% and ROIC of 8.97% indicate a decent return on equity and invested capital. Analysts estimate next year's revenue growth at 4.0%, which is slightly above the current valuation multiples. The Free Cash Flow Yield of 6.44% is attractive, suggesting a potential buying opportunity.

Risk Factors

The company is exposed to risks such as tariffs and supply chain disruptions. However, the management has stated that tariffs had a minimal impact on profitability in the third quarter, and they continue to work closely with suppliers and customers to mitigate the impact. The recent fire at the Ford aluminum supplier is being monitored, but no direct impact has been seen so far.

3. NewsRoom

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CTS Corporation Appoints Pratik Trivedi as Chief Operating Officer

Nov -26

Source: globenewswire.com

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CTS Eventim AG & Co. KGaA (CEVMY) Q3 2025 Earnings Call Transcript

Nov -22

Source: seekingalpha.com

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Comparing Ultralife (NASDAQ:ULBI) & CTS (NYSE:CTS)

Nov -17

Source: defenseworld.net

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CTS Corporation Declares a Dividend and Share Repurchase Program

Nov -07

Source: globenewswire.com

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CTS Corporation Announces Appointment of Kimberly Banks MacKay to its Board of Directors

Nov -06

Source: globenewswire.com

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CTS Corporation to Participate in the Southwest IDEAS Conference

Nov -03

Source: globenewswire.com

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CTS (NYSE:CTS) Trading Down 10% After Earnings Miss

Oct -30

Source: defenseworld.net

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CTS Corporation (CTS) Q3 2025 Earnings Call Transcript

Oct -28

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.79%)

6. Segments

Transportation

Expected Growth: 5.8%

CTS Corporation's 5.8% growth in Transportation is driven by increasing demand for automotive sensors, rising adoption of advanced driver-assistance systems (ADAS), and growing electrification of vehicles. Additionally, the company's focus on innovation, strategic partnerships, and expanding presence in emerging markets contribute to its growth momentum.

Industrial

Expected Growth: 5.5%

CTS Corporation's 5.5% growth in the Industrial segment is driven by increasing demand for sensors and actuators in automotive and industrial automation applications, as well as growing adoption of IoT and Industry 4.0 technologies. Additionally, the company's strategic acquisitions and investments in emerging technologies, such as electric vehicles and renewable energy, are contributing to its growth momentum.

Medical

Expected Growth: 6.2%

The 6.2% growth in Medical segment of CTS Corporation is driven by increasing demand for medical devices, expansion into emerging markets, and strategic acquisitions. Additionally, advancements in healthcare technology, aging population, and rising healthcare expenditure also contribute to this growth.

Aerospace & Defense

Expected Growth: 5.9%

CTS Corporation's 5.9% growth in Aerospace & Defense is driven by increasing demand for advanced sensors and connectivity solutions in military and commercial aircraft, as well as growing investments in space exploration and satellite communications. Additionally, the company's focus on innovation and R&D, coupled with strategic acquisitions, has enabled it to capitalize on emerging trends in the industry.

7. Detailed Products

Sensors and Actuators

CTS Corporation offers a wide range of sensors and actuators that are used in various industries such as automotive, industrial, and aerospace. These products are designed to provide accurate and reliable measurements and control.

Components and Subsystems

CTS Corporation provides a variety of components and subsystems that are used in electronic systems, including resistors, capacitors, inductors, and transformers.

Frequency Control and Filters

CTS Corporation offers a range of frequency control and filter products, including quartz crystals, oscillators, and filters, that are used in wireless communication systems, computers, and other electronic devices.

Electronic Manufacturing Services

CTS Corporation provides electronic manufacturing services, including printed circuit board assembly, box build, and testing, to original equipment manufacturers (OEMs) and electronic manufacturing services (EMS) providers.

Aerospace and Defense

CTS Corporation provides a range of products and services to the aerospace and defense industries, including sensors, actuators, and electronic components.

8. CTS Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

CTS Corporation faces moderate threat from substitutes due to the availability of alternative products and services in the market.

Bargaining Power Of Customers

CTS Corporation has a diverse customer base, which reduces the bargaining power of individual customers.

Bargaining Power Of Suppliers

CTS Corporation has a moderate dependence on its suppliers, which gives them some bargaining power.

Threat Of New Entrants

CTS Corporation operates in a capital-intensive industry, which creates a barrier to entry for new entrants.

Intensity Of Rivalry

CTS Corporation operates in a highly competitive industry, which leads to intense rivalry among existing players.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 12.01%
Debt Cost 7.03%
Equity Weight 87.99%
Equity Cost 7.03%
WACC 7.03%
Leverage 13.65%

11. Quality Control: CTS Corporation passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Bel Fuse

A-Score: 4.8/10

Value: 4.6

Growth: 7.1

Quality: 6.2

Yield: 0.0

Momentum: 7.0

Volatility: 3.7

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CTS

A-Score: 4.4/10

Value: 4.7

Growth: 5.8

Quality: 7.0

Yield: 0.0

Momentum: 2.0

Volatility: 7.0

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Daktronics

A-Score: 4.2/10

Value: 3.7

Growth: 4.0

Quality: 5.8

Yield: 0.0

Momentum: 8.5

Volatility: 3.3

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TTM Technologies

A-Score: 4.2/10

Value: 1.7

Growth: 4.4

Quality: 5.2

Yield: 0.0

Momentum: 10.0

Volatility: 3.7

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Vishay Precision Group

A-Score: 4.0/10

Value: 4.5

Growth: 2.9

Quality: 4.6

Yield: 0.0

Momentum: 8.5

Volatility: 3.7

1-Year Total Return ->

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SigmaTron International

A-Score: 3.2/10

Value: 9.3

Growth: 2.2

Quality: 2.5

Yield: 0.0

Momentum: 5.0

Volatility: 0.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

44.46$

Current Price

44.46$

Potential

-0.00%

Expected Cash-Flows