CTS
CTS Corporation
$64.63
Platform & Compounding FCF
50%
Two-stage FCF DCF
Moderate
·
Conviction
Undervalued
Trading 38.8% below fair value
You pay
$64.63
Bear
$62.43
Fair
$105.55
Bull
$156.20
Bear
$62.43
-3.4%
10% stage 1 growth, 11% discount
Fair
$105.55
+63.3%
17% stage 1 growth, 11% discount
Bull
$156.20
+141.7%
22% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (17% base case)
Terminal Value % of EV
44%
Implied Market Multiple
22.8x
Market is pricing in (growth)
10.8%
vs 17.2% base
Summary
Using a two-stage FCF DCF with 17% growth decelerating over 15 years, discounted at 11%, the base-case intrinsic value is $105.55 per share.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions