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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. CTS Corporation Reports Solid Q2 Performance

CTS Corporation reported second-quarter 2025 sales of $135 million, up 4% from the same period last year. The company's adjusted EBITDA expanded 250 basis points sequentially and 130 basis points compared to the second quarter of 2024. Earnings were $0.62 per diluted share for the second quarter, with adjusted earnings of $0.57 per diluted share, up 7% from the prior year period. This beat analysts' estimates of $0.55 per share. The company's diversified end market sales, including medical, aerospace and defense, and industrial, were $74 million, up 13% year-over-year.

Publication Date: Jul -28

📋 Highlights
  • Sales Growth: Total sales reached $135 million, representing a 4% year-over-year increase.
  • Diversified Markets Expansion: Diversified end market sales rose 13% to $74 million, driven by medical, aerospace, and industrial sectors.
  • Medical Segment Performance: Medical sales grew 8%, with therapeutic products up 60%, but diagnostic bookings declined 10% in Asia.
  • Aerospace and Defense Growth: Sales in this segment increased 34% year-over-year, with flat bookings compared to the prior year.
  • Earnings and Margins: Adjusted EBITDA expanded by 130 basis points year-over-year, with adjusted EPS of $0.57, up 7% from 2024.

Segment Performance

The medical end market saw sales increase 8% compared to the same period in 2024, driven by growth in therapeutic products, which were up approximately 60% year-over-year. However, diagnostic bookings were down 10% due to softness in Asia. Aerospace and Defense sales were up 34% from the second quarter of 2024, with bookings flat from the prior year period. Industrial sales were up 6% compared to the prior year period, with bookings up 22%. According to Kieran M. O'Sullivan, the company has a strong pipeline of opportunities, particularly in transportation.

Financials and Guidance

The company generated $28 million in operating cash flow in the second quarter and repurchased 412,000 shares of CTS stock for approximately $17 million. CTS maintained its guidance of sales in the range of $520 million to $550 million and adjusted diluted EPS to be in the range of $2.20 to $2.35. The company expects growth in diversified end markets, with a focus on expanding its customer base and range of applications.

Valuation and Outlook

At current prices, CTS trades at a P/E ratio of 19.48, a P/B ratio of 1.18, and an EV/EBITDA multiple of 11.54. The stock offers a dividend yield of 0.38% and a free cash flow yield of 7.09%. With a ROIC of 9.22% and ROE of 9.65%, the company's profitability metrics are decent. Analysts estimate next year's revenue growth at 6.8%, which seems achievable given the company's diversified end markets and growth initiatives.

Strategic Initiatives

The company is prioritizing growth, operational rigor, and employee engagement through its Evolution2030 strategic initiative, despite challenges from tariffs, geopolitical tensions, and economic pressures. With a net debt to EBITDA ratio of 0.34, CTS has the flexibility to pursue acquisitions and investments to drive growth. The company aims to achieve 5% organic growth and 5% growth through acquisitions, with a target to make an acquisition within the next 12 months.

3. NewsRoom

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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

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CTS (CTS) Q3 Earnings Lag Estimates

Oct -28

Source: zacks.com

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CTS Announces Third Quarter 2025 Results

Oct -28

Source: globenewswire.com

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CTS Corporation Announces Date for Third Quarter 2025 Earnings Release and Conference Call

Oct -15

Source: globenewswire.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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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

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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

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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

41.36$

Current Price

41.36$

Potential

-0.00%

Expected Cash-Flows