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

Analyst Ratings

This is a summary of recent ratings for CTS Corporation and Electro Scientific Industries, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CTS Corporation 0 1 1 0 2.50
Electro Scientific Industries 0 0 3 0 3.00

CTS Corporation currently has a consensus target price of $24.50, suggesting a potential downside of 11.23%. Electro Scientific Industries has a consensus target price of $24.67, suggesting a potential downside of 1.80%. Given Electro Scientific Industries’ stronger consensus rating and higher possible upside, analysts clearly believe Electro Scientific Industries is more favorable than CTS Corporation.

Profitability

This table compares CTS Corporation and Electro Scientific Industries’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CTS Corporation 8.79% 11.47% 7.16%
Electro Scientific Industries -9.00% -13.50% -8.93%

Risk and Volatility

CTS Corporation has a beta of 1.13, suggesting that its stock price is 13% more volatile than the S&P 500. Comparatively, Electro Scientific Industries has a beta of 0.62, suggesting that its stock price is 38% less volatile than the S&P 500.

Dividends

CTS Corporation pays an annual dividend of $0.16 per share and has a dividend yield of 0.6%. Electro Scientific Industries does not pay a dividend. CTS Corporation pays out 14.7% of its earnings in the form of a dividend. CTS Corporation has increased its dividend for 3 consecutive years.

Insider & Institutional Ownership

92.7% of CTS Corporation shares are held by institutional investors. Comparatively, 69.1% of Electro Scientific Industries shares are held by institutional investors. 1.8% of CTS Corporation shares are held by insiders. Comparatively, 6.2% of Electro Scientific Industries shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares CTS Corporation and Electro Scientific Industries’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
CTS Corporation $396.68 million 2.29 $34.38 million $1.09 25.32
Electro Scientific Industries $161.02 million 5.22 -$37.40 million ($0.63) -39.87

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

Summary

CTS Corporation beats Electro Scientific Industries on 10 of the 16 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.

Electro Scientific Industries Company Profile

Electro Scientific Industries, Inc. and its subsidiaries supply laser-based manufacturing solutions for industries reliant on microtechnologies. The Company operates through two segments: Component Processing and Micromachining. The Component Processing segment includes interconnect products, semiconductor products and component products. The interconnect, semiconductor and component products are sold to manufacturers of electronic components and are used to drill, cut, trim, ablate and test and mark features for the functionality of the component. The Micromachining segment includes products that are sold to manufacturers of end devices across various industries and are used to drill, cut or mark features on a range of materials, generally on the casing or external surface of the end device. Its integrated solutions allow industrial designers and process engineers to control the power of laser light to transform materials. It has operations in Asia, Europe and North America.

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