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Converge Technology Solutions (CTS-T) has had a mixed reception among analysts and investors. While some experts acknowledge its low valuation at under 9X earnings and potential upside given the tech sector's strength, others point to disappointing performance in recent quarters, with missed revenue and EBITDA expectations. The company's high debt-to-equity ratio and negative return on equity raise concerns about its financial health. Despite these issues, a few reviews highlight the company's commitment to returning capital to shareholders through buybacks and dividends, as well as ongoing management changes that could lead to improvements. Overall, while there is potential for recovery and growth, many experts urge caution due to the current operational challenges and lack of attractive acquisition opportunities.
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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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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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.
Converge Technology Solutions is a Canadian stock, trading under the symbol CTS-T on the Toronto Stock Exchange (CTS-CT). It is usually referred to as TSX:CTS or CTS-T
In the last year, 10 stock analysts published opinions about CTS-T. 5 analysts recommended to BUY the stock. 4 analysts recommended to SELL the stock. The latest stock analyst recommendation is . Read the latest stock experts' ratings for Converge Technology Solutions.
Converge Technology Solutions was recommended as a Top Pick by on . Read the latest stock experts ratings for Converge Technology Solutions.
Earnings reports or recent company news can cause the stock price to drop. Read stock experts’ recommendations for help on deciding if you should buy, sell or hold the stock.
10 stock analysts on Stockchase covered Converge Technology Solutions In the last year. It is a trending stock that is worth watching.
On 2025-04-01, Converge Technology Solutions (CTS-T) stock closed at a price of $5.475.
It is not getting it done with a lot of execution not happening now. It is cheap but needs a private equity group to take it out and have new management. There is already anticipation of a takeout so it is risky.