Critical Review: Jabil (JBL) versus CTS (CTS)

Jabil (NYSE: JBL) and CTS (NYSE:CTS) are both computer and technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, profitability, institutional ownership, risk, dividends, valuation and earnings.

Institutional and Insider Ownership

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99.8% of Jabil shares are owned by institutional investors. Comparatively, 95.9% of CTS shares are owned by institutional investors. 2.6% of Jabil shares are owned by company insiders. Comparatively, 1.8% of CTS shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Risk & Volatility

Jabil has a beta of 0.41, suggesting that its stock price is 59% less volatile than the S&P 500. Comparatively, CTS has a beta of 1.2, suggesting that its stock price is 20% more volatile than the S&P 500.

Earnings and Valuation

This table compares Jabil and CTS’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Jabil $19.06 billion 0.27 $129.09 million $1.85 15.75
CTS $422.99 million 2.28 $14.44 million $1.23 23.82

Jabil has higher revenue and earnings than CTS. Jabil is trading at a lower price-to-earnings ratio than CTS, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Jabil and CTS’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Jabil 0.60% 14.31% 3.01%
CTS 3.42% 12.16% 7.66%

Dividends

Jabil pays an annual dividend of $0.32 per share and has a dividend yield of 1.1%. CTS pays an annual dividend of $0.16 per share and has a dividend yield of 0.5%. Jabil pays out 17.3% of its earnings in the form of a dividend. CTS pays out 13.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Jabil and CTS, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Jabil 2 4 5 0 2.27
CTS 0 0 0 0 N/A

Jabil presently has a consensus price target of $32.50, suggesting a potential upside of 11.53%. Given Jabil’s higher probable upside, analysts plainly believe Jabil is more favorable than CTS.

Summary

Jabil beats CTS on 9 of the 15 factors compared between the two stocks.

Jabil Company Profile

Jabil Inc. provides electronic manufacturing services and solutions worldwide. The company operates through two segments, Electronics Manufacturing Services and Diversified Manufacturing Services. It offers electronics design, production, and product management services. The company provides electronic circuit design services, such as application-specific integrated circuit design, firmware development and rapid prototyping services; and designs plastic and metal enclosures that include the electro-mechanics, such as the printed circuit board assemblies (PCBA). It also specializes in three-dimensional mechanical design comprising the analysis of electronic, electro-mechanical, and optical assemblies, as well as offers various industrial design, advance mechanism development, and tooling management services. In addition, the company provides computer-assisted design services consisting of PCBA design, and PCBA design validation and verification services; and other consulting services, such as the generation of a bill of materials, approved vendor list, and assembly equipment configuration for various PCBA designs. Further, it offers product and process validation services that include product system, product safety, regulatory compliance, and reliability tests, as well as manufacturing test solution development services. Additionally, the company offers systems assembly, test, direct-order fulfillment, and configure-to-order services. It serves automotive and transportation, capital equipment, consumer lifestyles and wearable technologies, computing and storage, defense and aerospace, digital home, healthcare, industrial and energy, mobility, networking and telecommunications, packaging, point of sale, and printing industries. The company was formerly known as Jabil Circuit, Inc. and changed its name to Jabil Inc. in June 2017. Jabil Inc. was founded in 1966 and is headquartered in St. Petersburg, Florida.

CTS Company Profile

CTS Corporation designs, manufactures, and sells a range of sensors, electronic components, and actuators primarily to original equipment manufacturers for the aerospace, defense, communications, industrial, information technology, medical, and transportation markets. The company offers sensors and actuators used in passenger or consumer vehicles; electronic components used in communications infrastructure, information technology and other high-speed applications, switches, and potentiometers supplied to various markets; and fabricated piezoelectric materials and substrates used primarily in medical, industrial, defense and aerospace, and information technology markets. It markets its products through its sales engineers, independent manufacturers' representatives, and distributors in China, Denmark, Germany, India, Japan, Scotland, Singapore, Taiwan, the United States, the Czech Republic, and internationally. The company was founded in 1896 and is based in Lisle, Illinois.

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