Critical Survey: Hexagon (OTCMKTS:HXGBY) and CTS (NYSE:CTS)

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

Valuation and Earnings

This table compares Hexagon and CTS”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hexagon	$6.14 billion	4.68	$698.53 million	$0.45	23.76
CTS	$570.86 million	3.01	$65.32 million	$2.53	23.80

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

Dividends

Hexagon pays an annual dividend of $0.08 per share and has a dividend yield of 0.7%. CTS pays an annual dividend of $0.16 per share and has a dividend yield of 0.3%. Hexagon pays out 17.8% of its earnings in the form of a dividend. CTS pays out 6.3% 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.

Insider and Institutional Ownership

96.9% of CTS shares are owned by institutional investors. 2.4% 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 will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Hexagon	22.96%	9.95%	6.13%
CTS	12.94%	14.05%	10.10%

Risk and Volatility

Hexagon has a beta of 1.39, meaning that its stock price is 39% more volatile than the S&P 500. Comparatively, CTS has a beta of 0.94, meaning that its stock price is 6% less volatile than the S&P 500.

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hexagon	1	2	0	0	1.67
CTS	0	1	3	0	2.75

CTS has a consensus target price of $73.50, suggesting a potential upside of 22.05%. Given CTS’s stronger consensus rating and higher possible upside, analysts plainly believe CTS is more favorable than Hexagon.

Summary

CTS beats Hexagon on 10 of the 16 factors compared between the two stocks.

About Hexagon

Hexagon AB is a Sweden-based technology company that provides products and software for capturing, measuring and analyzing data about physical environments and manufactured products. Its technologies help customers create digital representations of assets, sites and processes. The company’s offerings include precision measurement systems, surveying and geospatial instruments, positioning technologies, and software for design, manufacturing and quality inspection. Hexagon serves industries such as manufacturing, construction, infrastructure, mining, agriculture and public safety.

About CTS

CTS Corporation designs and manufactures sensors, actuators and other electronic components for customers in a range of industries. Its products include frequency-control devices, connectivity components and electronic assemblies, as well as sensing and motion-control solutions. The company’s products are used in applications such as automotive systems, industrial equipment, medical devices, communications and aerospace and defense. CTS serves customers globally, with operations and business activities across multiple regions.