Head to Head Survey: NAPCO Security Technologies (NASDAQ:NSSC) vs. CTS (NYSE:CTS)

CTS (NYSE:CTS) and NAPCO Security Technologies (NASDAQ:NSSC) are both small-cap technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, earnings, risk, profitability, valuation, analyst recommendations and dividends.

Risk & Volatility

CTS has a beta of 1.05, indicating that its stock price is 5% more volatile than the S&P 500. Comparatively, NAPCO Security Technologies has a beta of 1.45, indicating that its stock price is 45% more volatile than the S&P 500.

Insider and Institutional Ownership

96.9% of CTS shares are owned by institutional investors. Comparatively, 85.1% of NAPCO Security Technologies shares are owned by institutional investors. 2.4% of CTS shares are owned by insiders. Comparatively, 5.7% of NAPCO Security Technologies shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares CTS and NAPCO Security Technologies”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CTS	$564.25 million	3.22	$65.32 million	$2.38	26.70
NAPCO Security Technologies	$181.62 million	7.54	$43.41 million	$1.04	36.85

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

Profitability

This table compares CTS and NAPCO Security Technologies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CTS	12.37%	13.48%	9.62%
NAPCO Security Technologies	18.70%	28.93%	24.39%

Dividends

CTS pays an annual dividend of $0.16 per share and has a dividend yield of 0.3%. NAPCO Security Technologies pays an annual dividend of $0.60 per share and has a dividend yield of 1.6%. CTS pays out 6.7% of its earnings in the form of a dividend. NAPCO Security Technologies pays out 57.7% 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. NAPCO Security Technologies has raised its dividend for 2 consecutive years. NAPCO Security Technologies is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent ratings for CTS and NAPCO Security Technologies, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CTS	0	1	1	0	2.50
NAPCO Security Technologies	0	2	6	0	2.75

NAPCO Security Technologies has a consensus price target of $48.67, indicating a potential upside of 27.00%. Given NAPCO Security Technologies’ stronger consensus rating and higher possible upside, analysts plainly believe NAPCO Security Technologies is more favorable than CTS.

Summary

NAPCO Security Technologies beats CTS on 12 of the 17 factors compared between the two stocks.

About CTS

CTS Corporation manufactures and sells sensors, actuators, and connectivity components in North America, Europe, and Asia. The company provides encoders, rotary position sensors, slide potentiometers, industrial and commercial rotary potentiometers. It also provides non-contacting, and contacting pedals; and eBrake pedals. In addition, the company offers flow meters, hydrophones, non-destructive testing, sonar, ultrasonic imaging, piezoelectric materials, piezoelectric sense products, and bulk products. Further, it provides eMobility, chassis, current sensors, clutch, brake, position sensors, stroke sensor, seating, speed, throttle, transmission, turbo, temperature sensors, and technical related products. Additionally, the company offers DIP, rotary selector, tactile, rotary DIP, and toggle switches, as well as provides transducer related products. Furthermore, it provides EMI, RFI, and RFI products; specialty and resistors; and frequency control products. The company sells and markets its products through its sales engineers, independent manufacturer representatives, and distributors. CTS Corporation was founded in 1896 and is based in Lisle, Illinois.

About NAPCO Security Technologies

Napco Security Technologies, Inc. develops, manufactures, and sells electronic security systems for commercial, residential, institutional, industrial, and governmental applications in the United States and internationally. Its access control systems include various types of identification readers, control panels, PC-based computers, and electronically activated door-locking devices; intrusion and fire alarm systems, consists of various detectors, a control panel, a digital keypad and signaling equipment; and door locking devices comprise microprocessor-based electronic door locks with push button, card readers and bio-metric operation, door alarms, mechanical door locks, and simple dead bolt locks. The company’s alarm systems include automatic communicators, cellular communication devices, control panels, combination control panels/digital communicators and digital keypad systems, fire alarm control panels, and area detectors; and video surveillance systems comprise video cameras, control panels, video monitors, or PCs. It also buys and resells various identification readers, video cameras, PC-based computers, and various peripheral equipment for access control and video surveillance systems; offers school security products; and markets peripheral and related equipment manufactured by other companies. The company markets and sells its products to independent distributors, dealers, and installers of security equipment. Napco Security Technologies, Inc. was founded in 1969 and is headquartered in Amityville, New York.