Advertisement
UK markets closed
  • NIKKEI 225

    37,068.35
    -1,011.35 (-2.66%)
     
  • HANG SENG

    16,224.14
    -161.76 (-0.99%)
     
  • CRUDE OIL

    83.26
    +0.12 (+0.14%)
     
  • GOLD FUTURES

    2,399.40
    -14.40 (-0.60%)
     
  • DOW

    37,986.40
    +211.00 (+0.56%)
     
  • Bitcoin GBP

    52,525.39
    +210.77 (+0.40%)
     
  • CMC Crypto 200

    1,338.21
    +25.59 (+1.95%)
     
  • NASDAQ Composite

    15,282.01
    -319.49 (-2.05%)
     
  • UK FTSE All Share

    4,296.41
    +6.39 (+0.15%)
     

CTS Corporation (NYSE:CTS) Just Reported And Analysts Have Been Lifting Their Price Targets

Investors in CTS Corporation (NYSE:CTS) had a good week, as its shares rose 5.0% to close at US$44.19 following the release of its annual results. The result was positive overall - although revenues of US$550m were in line with what the analysts predicted, CTS surprised by delivering a statutory profit of US$1.92 per share, modestly greater than expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for CTS

earnings-and-revenue-growth
earnings-and-revenue-growth

Taking into account the latest results, CTS' three analysts currently expect revenues in 2024 to be US$549.5m, approximately in line with the last 12 months. Statutory earnings per share are predicted to climb 15% to US$2.24. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$563.7m and earnings per share (EPS) of US$2.40 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.

ADVERTISEMENT

What's most unexpected is that the consensus price target rose 5.5% to US$45.00, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic CTS analyst has a price target of US$46.00 per share, while the most pessimistic values it at US$43.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 0.2% by the end of 2024. This indicates a significant reduction from annual growth of 5.9% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.3% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - CTS is expected to lag the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for CTS. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for CTS going out to 2025, and you can see them free on our platform here.

You can also see our analysis of CTS' Board and CEO remuneration and experience, and whether company insiders have been buying stock.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.