A Look At The Intrinsic Value Of CTS Corporation (NYSE:CTS)

Simply Wall St.11-22

Key Insights CTS' estimated fair value is US$50.44 based on 2 Stage Free Cash Flow to Equity Current share price of US$52.75 suggests CTS is potentially trading close to its fair value When ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2485410828?lang=en_US&edition=fundamental","thumbnail":"https://s.yimg.com/uu/api/res/1.2/4O.XA3nMujQmIJ6FpeDGgw--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/652d766724cd85c58695a2099131a0ff","is_english":true,"pubTime":"2024-11-22 01:02","share_image_url":"https://static.laohu8.com/5f26f4a48f9cb3e29be4d71d3ba8c038","id":"2485410828","market":"us","top_or_hot":-1,"title":"A Look At The Intrinsic Value Of CTS Corporation (NYSE:CTS)","media":"Simply Wall St.","content":"<div>\n<p>Key Insights\n\n CTS' estimated fair value is US$50.44 based on 2 Stage Free Cash Flow to Equity \n Current share price of US$52.75 suggests CTS is potentially trading close to its fair value \n When ...</p>\n\n<a href=\"https://finance.yahoo.com/news/look-intrinsic-value-cts-corporation-170237598.html\">Source Link</a>\n\n</div>\n","source":"yahoofinance","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>A Look At The Intrinsic Value Of CTS Corporation (NYSE:CTS)</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nA Look At The Intrinsic Value Of CTS Corporation (NYSE:CTS)\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-22 01:02 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/look-intrinsic-value-cts-corporation-170237598.html><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Key Insights\n\n CTS' estimated fair value is US$50.44 based on 2 Stage Free Cash Flow to Equity \n Current share price of US$52.75 suggests CTS is potentially trading close to its fair value \n When ...</p>\n\n<a href=\"https://finance.yahoo.com/news/look-intrinsic-value-cts-corporation-170237598.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4211","symbol_name":"区域性银行","start_time":0,"source_url":"https://finance.yahoo.com/news/look-intrinsic-value-cts-corporation-170237598.html","article_id":"2485410828","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/4O.XA3nMujQmIJ6FpeDGgw--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/652d766724cd85c58695a2099131a0ff"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2485410828","pubTimestamp":1732208557,"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"CTS' estimated fair value is US$50.44 based on 2 Stage Free Cash Flow to Equity. Current share price of US$52.75 suggests CTS is potentially trading close to its fair value. When compared to theindustry average discount of -22%, CTS' competitors seem to be trading at a greater premium to fair value. In this article we are going to estimate the intrinsic value of CTS Corporation  by taking the expected future cash flows and discounting them to their present value. The Discounted Cash Flow  model is the tool we will apply to do this. Don't get put off by the jargon, the math behind it is actually quite straightforward.Remember though, that there are many ways to estimate a company's value, and a DCF is just one method. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in the Simply Wall St analysis model.","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4211":"区域性银行","IE00B7SZL793.SGD":"Legg Mason Royce - US Small Cap Opportunity A Acc SGD-H","TV":"墨西哥电视","NYSE":"纽交所","DCF":"Dreyfus Alcentra Global Credit Income 2024 Target Term Fund, Inc","BK4145":"电子制造服务","IE00B19Z4B17.USD":"LEGG MASON ROYCE US SMALL CAP OPPORTUNITY \"A\" (USD) ACC","FCF":"第一联邦金融","CTS":"CTS Corp","BK4100":"有线和卫星","IE0031619046.USD":"LEGG MASON ROYCE US SMALL CAP OPPORTUNITY \"A\" (USD) INC","IE00B66KJ199.SGD":"LEGG MASON ROYCE US SMALL CAP OPPORTUNITY  \" A\" (SGD) ACC"},"translate_title":"CTS Corporation（纽约证券交易所股票代码：CTS）的内在价值一览","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"CTS":1,"DCF":1,"FCF":1,"NYSE":1,"TV":1},"content_text":"Key Insights\n\n CTS' estimated fair value is US$50.44 based on 2 Stage Free Cash Flow to Equity \n Current share price of US$52.75 suggests CTS is potentially trading close to its fair value \n When compared to theindustry average discount of -22%, CTS' competitors seem to be trading at a greater premium to fair value \n\n In this article we are going to estimate the intrinsic value of CTS Corporation (NYSE:CTS) by taking the expected future cash flows and discounting them to their present value. The Discounted Cash Flow (DCF) model is the tool we will apply to do this. Don't get put off by the jargon, the math behind it is actually quite straightforward. \n Remember though, that there are many ways to estimate a company's value, and a DCF is just one method. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in the Simply Wall St analysis model. \n Check out our latest analysis for CTS \n The Model \n We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. In the first stage we need to estimate the cash flows to the business over the next ten years. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. \n Generally we assume that a dollar today is more valuable than a dollar in the future, so we need to discount the sum of these future cash flows to arrive at a present value estimate: \n 10-year free cash flow (FCF) estimate \n\n\n\n\n2025\n2026\n2027\n2028\n2029\n2030\n2031\n2032\n2033\n2034\n\n\n Levered FCF ($, Millions) \nUS$80.1m\nUS$82.1m\nUS$80.2m\nUS$79.5m\nUS$79.6m\nUS$80.4m\nUS$81.5m\nUS$83.0m\nUS$84.6m\nUS$86.5m\n\n\nGrowth Rate Estimate Source\nAnalyst x1\nAnalyst x1\nEst @ -2.36%\nEst @ -0.86%\nEst @ 0.18%\nEst @ 0.91%\nEst @ 1.42%\nEst @ 1.78%\nEst @ 2.03%\nEst @ 2.21%\n\n\n Present Value ($, Millions) Discounted @ 7.2% \nUS$74.7\nUS$71.4\nUS$65.0\nUS$60.1\nUS$56.1\nUS$52.8\nUS$49.9\nUS$47.4\nUS$45.1\nUS$43.0\n\n\n\n(\"Est\" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = US$566m\n We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 2.6%. We discount the terminal cash flows to today's value at a cost of equity of 7.2%. \nTerminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = US$87m× (1 + 2.6%) ÷ (7.2%– 2.6%) = US$1.9b\nPresent Value of Terminal Value (PVTV)= TV / (1 + r)10= US$1.9b÷ ( 1 + 7.2%)10= US$954m\n The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is US$1.5b. The last step is to then divide the equity value by the number of shares outstanding. Relative to the current share price of US$52.8, the company appears around fair value at the time of writing. The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent. \n\n\n\n  NYSE:CTS Discounted Cash Flow November 21st 2024\n \n\n The Assumptions \n The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at CTS as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 7.2%, which is based on a levered beta of 1.123. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. \nSWOT Analysis for CTS\n\n\nStrength\n\nDebt is not viewed as a risk.\n\n\nBalance sheet summary for CTS.\n\n\n\nWeakness\n\nEarnings declined over the past year.\n\n\nDividend is low compared to the top 25% of dividend payers in the Electronic market.\n\n\nExpensive based on P/E ratio and estimated fair value.\n\n\nWhat are analysts forecasting for CTS?\n\n\n\nOpportunity\n\nAnnual earnings are forecast to grow for the next 3 years.\n\n\n\nThreat\n\nNo apparent threats visible for CTS.\n\n\n\n Looking Ahead: \n Whilst important, the DCF calculation is only one of many factors that you need to assess for a company. The DCF model is not a perfect stock valuation tool. Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation. For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation. For CTS, we've put together three essential elements you should look at: \n\nFinancial Health: Does CTS have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.\nFuture Earnings: How does CTS's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.\n Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! \n\n PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the NYSE every day. If you want to find the calculation for other stocks just search here.\nHave 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.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2485410828"}