CTS
CTS Corporation
$62.32
Platform & Compounding FCF
50%
Two-stage FCF DCF
Strong
·
Conviction
Undervalued
Trading 41.0% below fair value
You pay
$62.32
Bear
$62.43
Fair
$105.55
Bull
$156.20
Bear
$62.43
+0.2%
10% stage 1 growth, 11% discount
Fair
$105.55
+69.4%
17% stage 1 growth, 11% discount
Bull
$156.20
+150.6%
22% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (17% base case)
Terminal Value % of EV
44%
Implied Market Multiple
22.0x
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