Converge Technology Solutions Corp (CTS.CA) Stock Fundamental Analysis
TSX:CTS • CA21250C1068
5.99 CAD
0 (0%)
Last: Apr 23, 2025, 07:00 PM
Taking everything into account, CTS scores 5 out of 10 in our fundamental rating. CTS was compared to 11 industry peers in the IT Services industry. CTS has only an average score on both its financial health and profitability. 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.
- CTS had a positive operating cash flow in the past year.
- In multiple years CTS reported negative net income over the last 5 years.
- CTS had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
- The Return On Assets of CTS (-8.13%) is better than 66.67% of its industry peers.
- The Return On Equity of CTS (-49.54%) is comparable to the rest of the industry.
- CTS has a better Return On Invested Capital (5.10%) than 83.33% of its industry peers.
- Measured over the past 3 years, the Average Return On Invested Capital for CTS is significantly below the industry average of 9.33%.
- 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
- CTS has a better Operating Margin (2.35%) than 75.00% of its industry peers.
- CTS's Operating Margin has improved in the last couple of years.
- The Gross Margin of CTS (26.68%) is comparable to the rest of the industry.
- 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.
- Compared to 1 year ago, CTS has less shares outstanding
- Compared to 5 years ago, CTS has more shares outstanding
- 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.
- CTS has a Altman-Z score of 1.45. This is in the better half of the industry: CTS outperforms 75.00% of its industry peers.
- The Debt to FCF ratio of CTS is 1.13, which is an excellent value as it means it would take CTS, only 1.13 years of fcf income to pay off all of its debts.
- CTS's Debt to FCF ratio of 1.13 is amongst the best of the industry. CTS outperforms 91.67% of its industry peers.
- A Debt/Equity ratio of 0.80 indicates that CTS is somewhat dependend on debt financing.
- The Debt to Equity ratio of CTS (0.80) is comparable to the rest of the industry.
- 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.
- CTS has a worse Current ratio (0.93) than 66.67% of its industry peers.
- CTS has a Quick Ratio of 0.93. This is a bad value and indicates that CTS is not financially healthy enough and could expect problems in meeting its short term obligations.
- The Quick ratio of CTS (0.89) is worse than 66.67% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.93 | ||
| Quick Ratio | 0.89 |
3. Growth
3.1 Past
- The Earnings Per Share has grown by an impressive 22.64% over the past year.
- 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.
- Looking at the last year, CTS shows a decrease in Revenue. The Revenue has decreased by -4.18% in the last year.
- The Revenue has been growing by 30.39% on average over the past years. This is a very strong growth!
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
- When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
- 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
- CTS is valuated reasonably with a Price/Earnings ratio of 9.22.
- 91.67% of the companies in the same industry are more expensive than CTS, based on the Price/Earnings ratio.
- Compared to an average S&P500 Price/Earnings ratio of 26.98, CTS is valued rather cheaply.
- A Price/Forward Earnings ratio of 9.60 indicates a reasonable valuation of CTS.
- Based on the Price/Forward Earnings ratio, CTS is valued cheaper than 91.67% of the companies in the same industry.
- The average S&P500 Price/Forward Earnings ratio is at 28.01. CTS is valued rather cheaply when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.22 | ||
| Fwd PE | 9.6 |
4.2 Price Multiples
- Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of CTS indicates a rather cheap valuation: CTS is cheaper than 91.67% of the companies listed in the same industry.
- Based on the Price/Free Cash Flow ratio, CTS is valued cheaply inside the industry as 83.33% of the companies are valued more expensively.
| 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 0.06. 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 1.81.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1% |
5.2 History
- CTS is new to the dividend game and has less than 3 years of track record.
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%.