Novanta (NOVT) & CTS (CTS) Critical Contrast

Novanta (NASDAQ: NOVT) and CTS (NYSE:CTS) are both small-cap industrials companies, but which is the better business? We will contrast the two companies based on the strength of their analyst recommendations, earnings, institutional ownership, risk, dividends, valuation and profitability.

Volatility and Risk

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Novanta has a beta of 1.33, indicating that its stock price is 33% more volatile than the S&P 500. Comparatively, CTS has a beta of 1.28, indicating that its stock price is 28% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and target prices for Novanta and CTS, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Novanta 0 0 2 0 3.00
CTS 0 0 0 0 N/A

Novanta presently has a consensus price target of $54.00, indicating a potential downside of 4.76%. Given Novanta’s higher probable upside, analysts clearly believe Novanta is more favorable than CTS.

Institutional and Insider Ownership

82.7% of Novanta shares are held by institutional investors. Comparatively, 95.9% of CTS shares are held by institutional investors. 8.3% of Novanta shares are held by company insiders. Comparatively, 1.8% of CTS shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

CTS pays an annual dividend of $0.16 per share and has a dividend yield of 0.6%. Novanta does not pay a dividend. CTS pays out 37.2% of its earnings in the form of a dividend.

Profitability

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

Net Margins Return on Equity Return on Assets
Novanta 4.68% 7.84% 3.81%
CTS 3.42% 12.16% 7.66%

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Novanta $521.29 million 3.76 $60.05 million $1.63 34.79
CTS $422.99 million 2.17 $14.44 million $0.43 64.77

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

Summary

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

About Novanta

Novanta Inc., formerly GSI Group Inc., designs, develops, manufactures and sells precision photonic and motion control components and subsystems. The Company’s segments are Photonics, Vision and Precision Motion. The Photonics segment designs, manufactures and markets photonics-based solutions, including carbon dioxide (CO2) laser sources, laser scanning and laser beam delivery products, to customers around the world. The Vision Technologies segment designs, manufactures and markets a range of medical grade technologies, including visualization solutions, imaging informatics products, optical data collection and machine vision technologies, radio frequency identification (RFID) technologies, and thermal printers, to customers around the world. The Company’s Precision Motion segment designs, manufactures and markets optical encoders, precision motors and other motion control technology, air bearing spindles and precision machined components to customers around the world.

About CTS

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.

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