Reviewing CTS Corporation (CTS) and DragonWave (NASDAQ:DRWI)
CTS Corporation (NYSE: CTS) and DragonWave (NASDAQ:DRWI) are both small-cap computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, profitabiliy, analyst recommendations, dividends, institutional ownership, valuation and risk.
Volatility and Risk
CTS Corporation has a beta of 1.23, suggesting that its stock price is 23% more volatile than the S&P 500. Comparatively, DragonWave has a beta of 1.05, suggesting that its stock price is 5% more volatile than the S&P 500.
This is a breakdown of recent ratings and price targets for CTS Corporation and DragonWave, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
CTS Corporation presently has a consensus target price of $24.50, indicating a potential upside of 9.87%. DragonWave has a consensus target price of $2.23, indicating a potential upside of 792.00%. Given DragonWave’s higher probable upside, analysts clearly believe DragonWave is more favorable than CTS Corporation.
Insider & Institutional Ownership
92.3% of CTS Corporation shares are owned by institutional investors. Comparatively, 14.7% of DragonWave shares are owned by institutional investors. 1.7% of CTS Corporation shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
CTS Corporation pays an annual dividend of $0.16 per share and has a dividend yield of 0.7%. DragonWave does not pay a dividend. CTS Corporation pays out 17.6% of its earnings in the form of a dividend. DragonWave has increased its dividend for 3 consecutive years.
Valuation and Earnings
This table compares CTS Corporation and DragonWave’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|CTS Corporation||$407.12 million||1.80||$76.03 million||$0.91||24.51|
|DragonWave||$40.36 million||0.05||-$15.49 million||($2.80)||-0.09|
CTS Corporation has higher revenue and earnings than DragonWave. DragonWave is trading at a lower price-to-earnings ratio than CTS Corporation, indicating that it is currently the more affordable of the two stocks.
This table compares CTS Corporation and DragonWave’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
CTS Corporation beats DragonWave on 12 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.
DragonWave Company Profile
DragonWave Inc (DragonWave) is a provider of packet microwave solutions for Internet protocol (IP) networks. The Company operates through broadband wireless backhaul equipment segment. The principal application of DragonWave’s products is mobile network backhaul. Additional applications include leased line replacement, last mile fiber extension and enterprise networks. The Company’s product lines include Harmony, Horizon, Avenue and NetViewer. The Harmony product line is a multi-service wireless platform enabling time division multiplexing (TDM) and packet-based services across wireless or wireline infrastructure. The Company’s Horizon product family is an Ethernet microwave portfolio and consists of Horizon Compact+ and Horizon Quantum. Its NetViewer is a multi-service, multi-product network management platform. The NetViewer enables provisioning, management, monitoring and configuration across the line of products in a single graphical user interface (GUI)-based system.
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