CTS (NYSE:CTS) and SMTC (NASDAQ:SMTX) are both small-cap computer and technology companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, dividends, institutional ownership, profitability and valuation.

Earnings & Valuation

This table compares CTS and SMTC’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
CTS $422.99 million 2.16 $14.44 million $1.23 22.41
SMTC $139.23 million 0.84 -$7.84 million ($0.44) -11.52

CTS has higher revenue and earnings than SMTC. SMTC is trading at a lower price-to-earnings ratio than CTS, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares CTS and SMTC’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CTS 3.33% 14.11% 9.31%
SMTC -0.07% -0.56% -0.16%

Volatility and Risk

CTS has a beta of 1.34, indicating that its stock price is 34% more volatile than the S&P 500. Comparatively, SMTC has a beta of 0.35, indicating that its stock price is 65% less volatile than the S&P 500.

Institutional & Insider Ownership

93.5% of CTS shares are held by institutional investors. Comparatively, 14.6% of SMTC shares are held by institutional investors. 1.9% of CTS shares are held by insiders. Comparatively, 27.7% of SMTC shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

CTS pays an annual dividend of $0.16 per share and has a dividend yield of 0.6%. SMTC does not pay a dividend. CTS pays out 13.0% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for CTS and SMTC, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CTS 0 0 0 0 N/A
SMTC 0 0 1 0 3.00

SMTC has a consensus price target of $6.00, suggesting a potential upside of 18.34%. Given SMTC’s higher possible upside, analysts plainly believe SMTC is more favorable than CTS.

Summary

CTS beats SMTC on 11 of the 15 factors compared between the two stocks.

About CTS

CTS Corp is a designer and manufacturer of electronic components, actuators and sensors and a provider of services to OEMs in the automotive, communications, medical, defense and aerospace, industrial and computer markets. The company manufacture products in North America, Europe and Asia. CTS was founded in 1896 and is headquartered in Lisle, IL.

About SMTC

SMTC Corporation provides electronics manufacturing services worldwide. The company offers end-to-end electronics manufacturing services, including product design and engineering; printed circuit board assembly; production, enclosure, cable assembly, and precision metal fabrication; systems integration and testing; and configuration to order, build to order, and direct order fulfillment services. It provides integrated contract manufacturing services to original equipment manufacturers and technology companies primarily in the industrial, networking and communications, power and energy, and medical market sectors. SMTC Corporation was founded in 1985 and is headquartered in Markham, Canada.

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