NEW YORK (
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its increase in net income, largely solid financial position with reasonable debt levels by most measures, increase in stock price during the past year and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electronic Equipment, Instruments & Components industry. The net income increased by 22.0% when compared to the same quarter one year prior, going from $4.80 million to $5.86 million.
- CTS's debt-to-equity ratio is very low at 0.28 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.33, which illustrates the ability to avoid short-term cash problems.
- After a year of stock price fluctuations, the net result is that CTS's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- CTS CORP has improved earnings per share by 21.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CTS CORP reported lower earnings of $0.61 versus $0.64 in the prior year. This year, the market expects an improvement in earnings ($0.76 versus $0.61).
- CTS, with its decline in revenue, slightly underperformed the industry average of 4.6%. Since the same quarter one year prior, revenues slightly dropped by 0.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
CTS Corporation engages in the design, manufacture, assembly, and sale of electronic components and sensors, as well as the provision of electronics manufacturing services worldwide. It operates in two segments, Electronics Manufacturing Services, and Components and Sensors. The company has a P/E ratio of 17.9, above the average electronics industry P/E ratio of 17.1 and above the S&P 500 P/E ratio of 17.7. CTS has a market cap of $349.9 million and is part of the
industry. Shares are up 16.6% year to date as of the close of trading on Monday.
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-- Written by a member of TheStreet RatingsStaff