TSX:CTS - Post Discussion
Post by
retiredcf on May 15, 2023 7:33am
WELL vs CTS
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 $0.23 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.
That said, we think that CTS has been 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 over $5.00 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. (5iResearch)
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