CTS closed at $3.35 yesterday a couple of days after its quarterly results came out.
WELL meanwhile closed at $5.30 yesterday, the day before this morning's release of its latest quarterly results.
I own both and I'm down substantially on CTS and down somewhat on WELL. I'm feeling optimistic about the latter, not so much about the former.
I wonder if you could do a quick side-by-side QUANTITATVE comparison of the two and, based on that, advise if you think the present price discrepancy between them is justified by the underlying numbers, or if it it's based on sentiment. If the latter, what are your thoughts on a turn around in the perception of CTS, and where might it be price wise if it wasn't in the doghouse? (I wonder if yesterday's 23% gain for CTS could be meaningful ...?)
Thanks!
Peter
We would focus on stock valuation, not price. The price reflects number of shares among other factors and when comparing companies valuation is the better metric. CTS is 9X earnings, with a 1.2% dividend. It has $320M net debt, about 4X cash flow. Expected growth is about 30% over the next two years. WELL is twice its size, and 21X earnings, with no dividend. The balance sheet is similar. It is expected to go from a loss in 2022 to profit of 23c per share this year. Its business (healthcare related) is likely far more stable, and management is admired and owns 11%. We see WELL as better and more reliable. Its larger market cap also helps attract new investors. CTS we think was just beaten up too much. Investors thought it would be sold, and are confused by its strategy shift. The big gain we think was just a bounce off the prior day's big loss. We could 'argue' that the stock could be worth $5+, if it can hit next year's estimates. Keep in mind it was also 'approached' for a takeover near current levels. It just needs to return to normal business operations without distractions, and try and get back to growth.