Converge Technology Solutions Corp (CTS.CA) Stock Fundamental Analysis
Canada - Toronto Stock Exchange - TSX:CTS - CA21250C1068 - Common Stock
5.99 CAD
0 (0%)
CTS gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 12 industry peers in the IT Services industry. Both the profitability and the financial health of CTS get a neutral evaluation. Nothing too spectacular is happening here. CTS may be a bit undervalued, certainly considering the very reasonable score on growth
1. Profitability
1.1 Basic Checks
- In the past year CTS was profitable.
- In the past year CTS had a positive cash flow from operations.
- In multiple years CTS reported negative net income over the last 5 years.
- Each year in the past 5 years CTS had a positive operating cash flow.
1.2 Ratios
- CTS has a Return On Assets of -8.13%. This is in the better half of the industry: CTS outperforms 66.67% of its industry peers.
- CTS's Return On Equity of -49.54% is in line compared to the rest of the industry. CTS outperforms 58.33% of its industry peers.
- Looking at the Return On Invested Capital, with a value of 5.10%, CTS belongs to the top of the industry, outperforming 83.33% of the companies in the same industry.
- CTS had an Average Return On Invested Capital over the past 3 years of 4.32%. This is below the industry average of 9.03%.
- The last Return On Invested Capital (5.10%) for CTS is above the 3 year average (4.32%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -8.13% | ||
| ROE | -49.54% | ||
| ROIC | 5.1% |
ROA(3y)-2.33%
ROA(5y)-1.28%
ROE(3y)-15.08%
ROE(5y)-9.35%
ROIC(3y)4.32%
ROIC(5y)6.82%
1.3 Margins
- Looking at the Operating Margin, with a value of 2.35%, CTS is in the better half of the industry, outperforming 75.00% of the companies in the same industry.
- In the last couple of years the Operating Margin of CTS has grown nicely.
- CTS has a Gross Margin of 26.68%. This is comparable to the rest of the industry: CTS outperforms 41.67% of its industry peers.
- In the last couple of years the Gross Margin of CTS has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 2.35% | ||
| PM (TTM) | N/A | ||
| GM | 26.68% |
OM growth 3Y-11.63%
OM growth 5Y6.89%
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y5.64%
GM growth 5Y2.57%
2. Health
2.1 Basic Checks
- With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), CTS is destroying value.
- CTS has less shares outstanding than it did 1 year ago.
- CTS has more shares outstanding than it did 5 years ago.
- The debt/assets ratio for CTS has been reduced compared to a year ago.
2.2 Solvency
- Based on the Altman-Z score of 1.45, we must say that CTS is in the distress zone and has some risk of bankruptcy.
- Looking at the Altman-Z score, with a value of 1.45, CTS is in the better half of the industry, outperforming 75.00% of the companies in the same industry.
- CTS has a debt to FCF ratio of 1.13. This is a very positive value and a sign of high solvency as it would only need 1.13 years to pay back of all of its debts.
- CTS has a Debt to FCF ratio of 1.13. This is amongst the best in the industry. CTS outperforms 91.67% of its industry peers.
- CTS has a Debt/Equity ratio of 0.80. This is a neutral value indicating CTS is somewhat dependend on debt financing.
- CTS's Debt to Equity ratio of 0.80 is in line compared to the rest of the industry. CTS outperforms 50.00% of its industry peers.
- Although CTS does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.8 | ||
| Debt/FCF | 1.13 | ||
| Altman-Z | 1.45 |
ROIC/WACC0.65
WACC7.81%
2.3 Liquidity
- A Current Ratio of 0.93 indicates that CTS may have some problems paying its short term obligations.
- The Current ratio of CTS (0.93) is worse than 66.67% of its industry peers.
- A Quick Ratio of 0.89 indicates that CTS may have some problems paying its short term obligations.
- CTS has a Quick ratio of 0.89. This is in the lower half of the industry: CTS underperforms 66.67% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.93 | ||
| Quick Ratio | 0.89 |
3. Growth
3.1 Past
- CTS shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 22.64%, which is quite impressive.
- Measured over the past years, CTS shows a very strong growth in Earnings Per Share. The EPS has been growing by 86.63% on average per year.
- CTS shows a decrease in Revenue. In the last year, the revenue decreased by -4.18%.
- CTS shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 30.39% yearly.
EPS 1Y (TTM)22.64%
EPS 3Y86.63%
EPS 5YN/A
EPS Q2Q%21.05%
Revenue 1Y (TTM)-4.18%
Revenue growth 3Y19.27%
Revenue growth 5Y30.39%
Sales Q2Q%4.56%
3.2 Future
- The Earnings Per Share is expected to grow by 8.54% on average over the next years. This is quite good.
- CTS is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 2.44% yearly.
EPS Next Y-3.97%
EPS Next 2Y3.29%
EPS Next 3Y8.54%
EPS Next 5YN/A
Revenue Next Year2.01%
Revenue Next 2Y3.48%
Revenue Next 3Y2.44%
Revenue Next 5YN/A
3.3 Evolution
- The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
- The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
- Based on the Price/Earnings ratio of 9.22, the valuation of CTS can be described as reasonable.
- Based on the Price/Earnings ratio, CTS is valued cheaper than 91.67% of the companies in the same industry.
- When comparing the Price/Earnings ratio of CTS to the average of the S&P500 Index (27.38), we can say CTS is valued rather cheaply.
- With a Price/Forward Earnings ratio of 9.60, the valuation of CTS can be described as very reasonable.
- Based on the Price/Forward Earnings ratio, CTS is valued cheaply inside the industry as 91.67% of the companies are valued more expensively.
- When comparing the Price/Forward Earnings ratio of CTS to the average of the S&P500 Index (24.29), we can say CTS is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.22 | ||
| Fwd PE | 9.6 |
4.2 Price Multiples
- CTS's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. CTS is cheaper than 91.67% of the companies in the same industry.
- Compared to the rest of the industry, the Price/Free Cash Flow ratio of CTS indicates a rather cheap valuation: CTS is cheaper than 83.33% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 4.23 | ||
| EV/EBITDA | 7.98 |
4.3 Compensation for Growth
- The decent profitability rating of CTS may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)N/A
EPS Next 2Y3.29%
EPS Next 3Y8.54%
5. Dividend
5.1 Amount
- With a Yearly Dividend Yield of 1.00%, CTS has a reasonable but not impressive dividend return.
- CTS's Dividend Yield is rather good when compared to the industry average which is at 0.04. CTS pays more dividend than 100.00% of the companies in the same industry.
- With a Dividend Yield of 1.00, CTS pays less dividend than the S&P500 average, which is at 1.85.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1% |
5.2 History
- CTS does not have a reliable dividend history as it only pays dividend since a couple or years.
Dividend Growth(5Y)N/A
Div Incr Years1
Div Non Decr Years1
5.3 Sustainability
- The earnings of CTS are negative and hence is the payout ratio. CTS will probably not be able to sustain this dividend level.
DP-6.06%
EPS Next 2Y3.29%
EPS Next 3Y8.54%
Converge Technology Solutions Corp
TSX:CTS (4/23/2025, 7:00:00 PM)
5.99
0 (0%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)03-05 2025-03-05/amc
Earnings (Next)05-07 2025-05-07
Inst Owners32.73%
Inst Owner ChangeN/A
Ins Owners5.89%
Ins Owner ChangeN/A
Market Cap1.13B
Revenue(TTM)2.59B
Net Income(TTM)-177.71M
Analysts73.33
Price Target5.92 (-1.17%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1% |
Yearly Dividend0.05
Dividend Growth(5Y)N/A
DP-6.06%
Div Incr Years1
Div Non Decr Years1
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)48.7%
Min EPS beat(2)24.14%
Max EPS beat(2)73.27%
EPS beat(4)3
Avg EPS beat(4)29.84%
Min EPS beat(4)-14.02%
Max EPS beat(4)73.27%
EPS beat(8)6
Avg EPS beat(8)23.18%
EPS beat(12)10
Avg EPS beat(12)27.25%
EPS beat(16)10
Avg EPS beat(16)8.62%
Revenue beat(2)1
Avg Revenue beat(2)1.69%
Min Revenue beat(2)-1.98%
Max Revenue beat(2)5.36%
Revenue beat(4)2
Avg Revenue beat(4)-0.94%
Min Revenue beat(4)-7.62%
Max Revenue beat(4)5.36%
Revenue beat(8)5
Avg Revenue beat(8)1.15%
Revenue beat(12)7
Avg Revenue beat(12)-2.47%
Revenue beat(16)9
Avg Revenue beat(16)-1.7%
PT rev (1m)5.45%
PT rev (3m)17.6%
EPS NQ rev (1m)-10.96%
EPS NQ rev (3m)-11.37%
EPS NY rev (1m)-0.32%
EPS NY rev (3m)2.79%
Revenue NQ rev (1m)-0.08%
Revenue NQ rev (3m)0.42%
Revenue NY rev (1m)0.92%
Revenue NY rev (3m)1.11%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.22 | ||
| Fwd PE | 9.6 | ||
| P/S | 0.44 | ||
| P/FCF | 4.23 | ||
| P/OCF | 4.21 | ||
| P/B | 3.15 | ||
| P/tB | N/A | ||
| EV/EBITDA | 7.98 |
EPS(TTM)0.65
EY10.85%
EPS(NY)0.62
Fwd EY10.42%
FCF(TTM)1.41
FCFY23.62%
OCF(TTM)1.42
OCFY23.75%
SpS13.74
BVpS1.9
TBVpS-1.65
PEG (NY)N/A
PEG (5Y)N/A
Graham NumberN/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -8.13% | ||
| ROE | -49.54% | ||
| ROCE | 7.08% | ||
| ROIC | 5.1% | ||
| ROICexc | 6.11% | ||
| ROICexgc | 90.81% | ||
| OM | 2.35% | ||
| PM (TTM) | N/A | ||
| GM | 26.68% | ||
| FCFM | 10.3% |
ROA(3y)-2.33%
ROA(5y)-1.28%
ROE(3y)-15.08%
ROE(5y)-9.35%
ROIC(3y)4.32%
ROIC(5y)6.82%
ROICexc(3y)5.23%
ROICexc(5y)10.33%
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)6%
ROCE(5y)9.47%
ROICexgc growth 3YN/A
ROICexgc growth 5YN/A
ROICexc growth 3Y-4.82%
ROICexc growth 5Y-27.87%
OM growth 3Y-11.63%
OM growth 5Y6.89%
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y5.64%
GM growth 5Y2.57%
F-Score5
Asset Turnover1.19
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.8 | ||
| Debt/FCF | 1.13 | ||
| Debt/EBITDA | 1.77 | ||
| Cap/Depr | 1.44% | ||
| Cap/Sales | 0.06% | ||
| Interest Coverage | 2.57 | ||
| Cash Conversion | 166.18% | ||
| Profit Quality | N/A | ||
| Current Ratio | 0.93 | ||
| Quick Ratio | 0.89 | ||
| Altman-Z | 1.45 |
F-Score5
WACC7.81%
ROIC/WACC0.65
Cap/Depr(3y)13.45%
Cap/Depr(5y)14.95%
Cap/Sales(3y)0.52%
Cap/Sales(5y)0.5%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)22.64%
EPS 3Y86.63%
EPS 5YN/A
EPS Q2Q%21.05%
EPS Next Y-3.97%
EPS Next 2Y3.29%
EPS Next 3Y8.54%
EPS Next 5YN/A
Revenue 1Y (TTM)-4.18%
Revenue growth 3Y19.27%
Revenue growth 5Y30.39%
Sales Q2Q%4.56%
Revenue Next Year2.01%
Revenue Next 2Y3.48%
Revenue Next 3Y2.44%
Revenue Next 5YN/A
EBIT growth 1Y30.87%
EBIT growth 3Y5.4%
EBIT growth 5Y39.37%
EBIT Next Year259.93%
EBIT Next 3Y59.08%
EBIT Next 5YN/A
FCF growth 1Y22.02%
FCF growth 3Y48.95%
FCF growth 5Y60.56%
OCF growth 1Y16.89%
OCF growth 3Y45.52%
OCF growth 5Y58.51%
Converge Technology Solutions Corp / CTS.CA FAQ
What is the ChartMill fundamental rating of Converge Technology Solutions Corp (CTS.CA) stock?
ChartMill assigns a fundamental rating of 5 / 10 to CTS.CA.
Can you provide the valuation status for Converge Technology Solutions Corp?
ChartMill assigns a valuation rating of 7 / 10 to Converge Technology Solutions Corp (CTS.CA). This can be considered as Undervalued.
How profitable is Converge Technology Solutions Corp (CTS.CA) stock?
Converge Technology Solutions Corp (CTS.CA) has a profitability rating of 6 / 10.
Can you provide the financial health for CTS stock?
The financial health rating of Converge Technology Solutions Corp (CTS.CA) is 4 / 10.
Can you provide the dividend sustainability for CTS stock?
The dividend rating of Converge Technology Solutions Corp (CTS.CA) is 2 / 10 and the dividend payout ratio is -6.06%.