Jason Donville Converge Technology Solutions CTS-T DON'T BUY Jan 06, 2025

Fundamentally, the story hasn't changed. Market's gone through a correction. Very inexpensive. Good play on AI, as purchases in that area are made through a company like this. Be patient. Low valuation, raised dividend, buying back stock, you'll be fine.

It's done OK, but not as great as the big names. 12-month target is $6.55. Pretty widely held. Removed from the TSX Composite, so that dragged it out of some portfolios. Buy in thirds here at $4.70, $4.50, and $4.25.

Will see strength in the tech sector going forward. Would recommend buying if the chart begins to turn. Seeing upside in the stock. 

We continue to like CTS, and although its recent momentum has not been favourable, we believe its long-term value is still in play. It pays a small yield of 1.4%, analysts expect decent forward sales and earnings growth, albeit slightly lumpy, but its valuation reflects this, at 7X forward earnings.  Its valuation is cheap, its debt levels are fine, and its free cash flow is impressive. While recent momentum has not been great, we continue to believe its valuation will re-rate as its fundamentals continue to improve. 
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Owns small amount of shares. M&A has paused lately. Strategic review didn't go well. Time will tell whether business will continue to perform. Wait and see type of stock.  

They don't make a lot of profit. Cut it and move on. Take a tax loss.

Very high debt to equity of around 99%. ROE is -33%. Financial metrics tell him to stand aside.

Company has been disappointing lately. 2020 was a good year, but since then growth has slowed. Earnings not matching expectations. Share price is cheap, but better options out there for investors. Has sold shares. Management team not meeting with investors enough. 

Average target is now $5.04. Post-earnings, Scotiabank lowered its rating from $5 to $4. At less than 9X earnings it certainly can still be called cheap. Q3 results showed EPS of 12c, beating estimates of 9.5c. Revenue of $630.7M slightly missed estimates of $639.7M. EBITDA missed estimates by 14%. Guidance was mostly inline with estimates. Q3 sales fell 8.9% and we certainly would prefer to see this trend reverse. The CC did not add a whole lot. The CEO/Board transition is ahead of plan. CTS continues to return capital to shareholders (buybacks and dividends). CTS is not seeing attractive acquisitions and prefers to buyback its stock over making a mis-priced deal. With rising cash flow conversion the balance sheet is in much better shape, with net debt less than six months of cash flow now. This 'should' help the valuation multiple over time. 
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