Head to Head Review: CTS (CTS) & Transcat (TRNS)

Transcat (NASDAQ: TRNS) and CTS (NYSE:CTS) are both small-cap computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their analyst recommendations, risk, valuation, earnings, profitability, institutional ownership and dividends.

Profitability

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

Net Margins Return on Equity Return on Assets
Transcat 3.24% 10.03% 4.94%
CTS 3.42% 12.16% 7.66%

Risk & Volatility

Transcat has a beta of 0.42, indicating that its stock price is 58% less volatile than the S&P 500. Comparatively, CTS has a beta of 1.2, indicating that its stock price is 20% more volatile than the S&P 500.

Dividends

CTS pays an annual dividend of $0.16 per share and has a dividend yield of 0.5%. Transcat does not pay a dividend. CTS pays out 13.0% of its earnings in the form of a dividend.

Earnings & Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Transcat $143.90 million 0.83 $4.52 million $0.64 26.02
CTS $422.99 million 2.28 $14.44 million $1.23 23.82

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

Insider and Institutional Ownership

55.2% of Transcat shares are held by institutional investors. Comparatively, 95.9% of CTS shares are held by institutional investors. 8.8% of Transcat shares are held by company insiders. Comparatively, 1.8% of CTS shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Transcat and CTS, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Transcat 0 0 3 0 3.00
CTS 0 0 0 0 N/A

Transcat currently has a consensus target price of $20.00, indicating a potential upside of 20.12%. Given Transcat’s higher possible upside, analysts plainly believe Transcat is more favorable than CTS.

Summary

CTS beats Transcat on 10 of the 15 factors compared between the two stocks.

About Transcat

Transcat, Inc. provides calibration and laboratory instrument services in the United States, Canada, and internationally. It operates in two segments, Service and Distribution. The Service segment offers calibration, repair, inspection, analytical qualifications, preventative maintenance, consulting, and other related services. This segment also provides CalTrak, a proprietary document and asset management system that is used to integrate and manage the workflow of its calibration service centers and customers' assets; CalTrak Online, which provides its customers with Web-based asset management capability, as well as an off-site archive of calibration and other service records; and Compliance, Control and Cost, a cloud-based customer portal and asset management tool. The Distribution segment distributes approximately 100,000 test, measurement, and control instruments for customers' test and measurement instrumentation needs. This segment markets and sells its products through Website, digital and print advertising, proactive outbound sales, and an inbound call center. The company provides services and products to highly regulated industries, principally life science, which includes companies in the pharmaceutical, biotechnology, medical device, and other FDA-regulated industries; and additional industries, including industrial manufacturing, oil and gas and alternative energy, aerospace and defense, and other industries that require accuracy in processes and confirmation of the capabilities of their equipment. Transcat, Inc. was founded in 1964 and is headquartered in Rochester, New York.

About CTS

CTS Corporation designs, manufactures, and sells a range of sensors, electronic components, and actuators primarily to original equipment manufacturers for the aerospace, defense, communications, industrial, information technology, medical, and transportation markets. The company offers sensors and actuators used in passenger or consumer vehicles; electronic components used in communications infrastructure, information technology and other high-speed applications, switches, and potentiometers supplied to various markets; and fabricated piezoelectric materials and substrates used primarily in medical, industrial, defense and aerospace, and information technology markets. It markets its products through its sales engineers, independent manufacturers' representatives, and distributors in China, Denmark, Germany, India, Japan, Scotland, Singapore, Taiwan, the United States, the Czech Republic, and internationally. The company was founded in 1896 and is based in Lisle, Illinois.

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