Critical Survey: CTS (NYSE:CTS) vs. Data I/O (NASDAQ:DAIO)

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

Institutional and Insider Ownership

37.0% of Data I/O shares are owned by institutional investors. Comparatively, 96.9% of CTS shares are owned by institutional investors. 2.6% of Data I/O shares are owned by company insiders. Comparatively, 1.6% of CTS shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Data I/O and CTS”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Data I/O	$21.50 million	1.04	-$4.99 million	($0.54)	-4.39
CTS	$541.32 million	2.57	$65.32 million	$2.19	22.13

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

Volatility and Risk

Data I/O has a beta of 1.1, indicating that its stock price is 10% more volatile than the S&P 500. Comparatively, CTS has a beta of 0.93, indicating that its stock price is 7% less volatile than the S&P 500.

Profitability

This table compares Data I/O and CTS’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Data I/O	-23.19%	-29.44%	-20.97%
CTS	12.07%	12.14%	8.56%

Analyst Ratings

This is a breakdown of current ratings and price targets for Data I/O and CTS, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Data I/O	2	0	2	1	2.40
CTS	0	1	0	0	2.00

Data I/O presently has a consensus price target of $5.11, suggesting a potential upside of 115.61%. Given Data I/O’s stronger consensus rating and higher possible upside, analysts clearly believe Data I/O is more favorable than CTS.

Summary

CTS beats Data I/O on 9 of the 15 factors compared between the two stocks.

About Data I/O

Data I/O Corporation, together with its subsidiaries, engages in the design, manufacture, and sale of programming and security deployment systems and services for electronic device manufacturers in the United States, Europe, and internationally. Its programming system products are used to program integrated circuits (ICs) with the specific data for the ICs. The company offers PSV handlers off-line automated programming systems, such as PSV2800 automated programming system which focuses on high-volume manufacturing in a lower cost platform; PSV7000 automated programming system for security deployment upgrades; PSV5000 automated programming system that combines mid-range capacity and supports security deployment; and PSV3500 automated programming system which provides basic programming needs. It also provides SentriX security deployment system; and LumenX and non-automated FlashPAK III programming systems. In addition, the company offers hardware support, system installation and repair, and device programming services. It markets and sells its products to original equipment manufacturers in automotive and consumer electronics, internet of things, and industrial, as well as electronic manufacturing service contract manufacturers through direct sales, and indirect sales representatives and distributors. Data I/O Corporation was incorporated in 1969 and is headquartered in Redmond, Washington.

About CTS

CTS Corporation manufactures and sells sensors, actuators, and connectivity components in North America, Europe, and Asia. The company provides encoders, rotary position sensors, slide potentiometers, industrial and commercial rotary potentiometers. It also provides non-contacting, and contacting pedals; and eBrake pedals. In addition, the company offers flow meters, hydrophones, non-destructive testing, sonar, ultrasonic imaging, piezoelectric materials, piezoelectric sense products, and bulk products. Further, it provides eMobility, chassis, current sensors, clutch, brake, position sensors, stroke sensor, seating, speed, throttle, transmission, turbo, temperature sensors, and technical related products. Additionally, the company offers DIP, rotary selector, tactile, rotary DIP, and toggle switches, as well as provides transducer related products. Furthermore, it provides EMI, RFI, and RFI products; specialty and resistors; and frequency control products. The company sells and markets its products through its sales engineers, independent manufacturer representatives, and distributors. CTS Corporation was founded in 1896 and is based in Lisle, Illinois.