CTS (NYSE:CTS) and NAPCO Security Technologies (NASDAQ:NSSC) Head-To-Head Contrast

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

Valuation & Earnings

This table compares NAPCO Security Technologies and CTS”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NAPCO Security Technologies	$181.62 million	7.79	$43.41 million	$1.04	38.09
CTS	$541.32 million	3.38	$65.32 million	$2.38	26.93

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

Dividends

NAPCO Security Technologies pays an annual dividend of $0.60 per share and has a dividend yield of 1.5%. CTS pays an annual dividend of $0.16 per share and has a dividend yield of 0.2%. NAPCO Security Technologies pays out 57.7% of its earnings in the form of a dividend. CTS pays out 6.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. NAPCO Security Technologies has increased its dividend for 2 consecutive years. NAPCO Security Technologies is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current ratings and recommmendations for NAPCO Security Technologies and CTS, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NAPCO Security Technologies	0	2	6	0	2.75
CTS	0	1	1	0	2.50

NAPCO Security Technologies presently has a consensus price target of $48.67, suggesting a potential upside of 22.86%. Given NAPCO Security Technologies’ stronger consensus rating and higher possible upside, equities research analysts plainly believe NAPCO Security Technologies is more favorable than CTS.

Institutional and Insider Ownership

85.1% of NAPCO Security Technologies shares are held by institutional investors. Comparatively, 96.9% of CTS shares are held by institutional investors. 5.7% of NAPCO Security Technologies shares are held by insiders. Comparatively, 2.4% of CTS shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Risk and Volatility

NAPCO Security Technologies has a beta of 1.45, suggesting that its share price is 45% more volatile than the S&P 500. Comparatively, CTS has a beta of 1.05, suggesting that its share price is 5% more volatile than the S&P 500.

Profitability

This table compares NAPCO Security Technologies and CTS’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NAPCO Security Technologies	18.70%	28.93%	24.39%
CTS	12.37%	13.48%	9.62%

Summary

NAPCO Security Technologies beats CTS on 12 of the 17 factors compared between the two stocks.

About NAPCO Security Technologies

Napco Security Technologies, Inc. develops, manufactures, and sells electronic security systems for commercial, residential, institutional, industrial, and governmental applications in the United States and internationally. Its access control systems include various types of identification readers, control panels, PC-based computers, and electronically activated door-locking devices; intrusion and fire alarm systems, consists of various detectors, a control panel, a digital keypad and signaling equipment; and door locking devices comprise microprocessor-based electronic door locks with push button, card readers and bio-metric operation, door alarms, mechanical door locks, and simple dead bolt locks. The company’s alarm systems include automatic communicators, cellular communication devices, control panels, combination control panels/digital communicators and digital keypad systems, fire alarm control panels, and area detectors; and video surveillance systems comprise video cameras, control panels, video monitors, or PCs. It also buys and resells various identification readers, video cameras, PC-based computers, and various peripheral equipment for access control and video surveillance systems; offers school security products; and markets peripheral and related equipment manufactured by other companies. The company markets and sells its products to independent distributors, dealers, and installers of security equipment. Napco Security Technologies, Inc. was founded in 1969 and is headquartered in Amityville, New York.

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.