Shares of industrial supplierCTS Corporation(NYSE: CTS) jumped as much as 13.3% in trading on Tuesday after the company reported fourth-quarter 2023 financial results. Shares are still up 10.2% as of 2 p.m. ET.
Better than expected
CTS isn't blowing the doors off the industry, but it's at least performing better than expected. Revenue was down 12% in the quarter to $125 million and net income was flat at $15 million, or $0.49 per share.
Analysts were expecting revenue of $124.5 million and earnings of just $0.46 per share, so clearing that bar was enough for investors today.
For the quarter, non-transportation end market demand fell 22% as industrial and distribution customers pulled back on spending. Transportation fell 3% on slower commercial vehicle sales.
More of the same in 2024
Management said 2024 revenue would be $530 million to $570 million, flat with the $550 million recorded in 2023. Earnings are expected to be $2.10 to $2.35 per share, up from $1.92 per share.
Buybacks are starting to help CTS' earnings per share and a $100 million buyback program was recently announced. On the balance sheet, there's $163.9 million in stock and $67.5 million in debt, so there's room to use all of the buyback relatively quickly if the company chooses to.
I see this as a case of management setting the bar low enough that it could clear it in earnings, but until CTS grows, it's a stock I'm going to stay out of.
Should you invest $1,000 in CTS right now?
Before you buy stock in CTS, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and CTS wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
*Stock Advisor returns as of February 6, 2024
Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
