CTS
CTS Corporation
$54.95
Platform & Compounding FCF
50%
Two-stage FCF DCF
Moderate
·
Conviction
Fair Value
Trading 15.5% below fair value
You pay
$54.95
Bear
$47.77
Fair
$65.06
Bull
$82.10
Bear
$47.77
-13.1%
6% stage 1 growth, 11% discount
Fair
$65.06
+18.4%
10% stage 1 growth, 11% discount
Bull
$82.10
+49.4%
13% stage 1 growth, 11% discount
Adjust Assumptions
10.2%
11.0%
3.0%
Key Value Driver
FCF growth rate (10% base case)
Terminal Value % of EV
39%
Implied Market Multiple
18.5x
Market is pricing in (growth)
7.9%
vs 10.2% base
Summary
Using a two-stage FCF DCF with 10% growth decelerating over 15 years, discounted at 11%, the base-case intrinsic value is $65.06 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