CTS Corporation (CTS) & IPG Photonics Corporation (IPGP) Critical Review

CTS Corporation (NYSE: CTS) and IPG Photonics Corporation (NASDAQ:IPGP) are both computer and technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, valuation, earnings, dividends, risk, analyst recommendations and institutional ownership.

Profitability

This table compares CTS Corporation and IPG Photonics Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CTS Corporation 7.49% 11.54% 7.08%
IPG Photonics Corporation 26.84% 19.75% 17.31%

Valuation and Earnings

This table compares CTS Corporation and IPG Photonics Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
CTS Corporation $407.12 million 1.83 $76.03 million $0.91 24.89
IPG Photonics Corporation $1.20 billion 7.94 $515.19 million $5.97 29.67

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

Dividends

CTS Corporation pays an annual dividend of $0.16 per share and has a dividend yield of 0.7%. IPG Photonics Corporation does not pay a dividend. CTS Corporation pays out 17.6% of its earnings in the form of a dividend. CTS Corporation has raised its dividend for 3 consecutive years.

Volatility and Risk

CTS Corporation has a beta of 1.21, suggesting that its stock price is 21% more volatile than the S&P 500. Comparatively, IPG Photonics Corporation has a beta of 1.64, suggesting that its stock price is 64% more volatile than the S&P 500.

Insider & Institutional Ownership

93.4% of CTS Corporation shares are owned by institutional investors. Comparatively, 59.2% of IPG Photonics Corporation shares are owned by institutional investors. 1.8% of CTS Corporation shares are owned by company insiders. Comparatively, 33.8% of IPG Photonics Corporation 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.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for CTS Corporation and IPG Photonics Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CTS Corporation 0 2 1 0 2.33
IPG Photonics Corporation 0 3 5 0 2.63

CTS Corporation presently has a consensus target price of $24.50, suggesting a potential upside of 8.17%. IPG Photonics Corporation has a consensus target price of $150.00, suggesting a potential downside of 15.30%. Given CTS Corporation’s higher possible upside, equities analysts clearly believe CTS Corporation is more favorable than IPG Photonics Corporation.

Summary

IPG Photonics Corporation beats CTS Corporation on 13 of the 17 factors compared between the two stocks.

CTS Corporation Company Profile

CTS Corporation is a manufacturer of sensors, electronic components and actuators. The Company designs, manufactures and sells a line of sensors, electronic components and actuators primarily to original equipment manufacturers (OEMs) for the transportation, industrial, medical, information technology, defense and aerospace, and communications markets. It operates manufacturing facilities in North America, Asia and Europe. Its products perform specific electronic functions for a given product family and are intended for use in customer assemblies. The Company’s products consist principally of sensors and actuators used in passenger or commercial vehicles; electronic components used in communications infrastructure, information technology and other high-speed applications; switches and potentiometers supplied to multiple markets, and fabricated piezoelectric materials and substrates used primarily in medical, industrial, defense and aerospace, and information technology markets.

IPG Photonics Corporation Company Profile

IPG Photonics Corporation is a developer and manufacturer of a line of fiber lasers, fiber amplifiers, diode lasers, laser systems and optical accessories that are used for various applications. The Company offers a line of lasers and amplifiers, which are used in materials processing, communications and medical applications. The Company sells its products globally to original equipment manufacturers (OEMs), system integrators and end users. The Company’s manufacturing facilities are located in the United States, Germany and Russia. The Company offers laser-based systems for certain markets and applications. Its products are designed to be used as general-purpose energy or light sources. Its product line includes High-Power Ytterbium CW (1,000-100,000 Watts), Mid-Power Ytterbium CW (100-999 Watts), Pulsed Ytterbium (0.1 to 200 Watts), Pulsed and CW, Quasi-CW Ytterbium (100-4,500 Watts), Erbium Amplifiers and Transceivers.

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