Electronic components manufacturer CTS Corporation (NYSE: CTS) reported Q1 CY2026 results beating Wall Street’s revenue expectations, with sales up 10.7% year on year to $139.2 million. The company’s full-year revenue guidance of $570 million at the midpoint came in 0.8% above analysts’ estimates. Its non-GAAP profit of $0.62 per share was 19.2% above analysts’ consensus estimates.

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“CTS delivered another quarter of strong performance, with diversified end-market sales up 18% year over year and modest growth in transportation,” said Kieran O’Sullivan, CEO of CTS Corporation.

Company Overview

With roots dating back to 1896 and a global manufacturing footprint, CTS (NYSE: CTS) designs and manufactures sensors, connectivity components, and actuators for aerospace, defense, industrial, medical, and transportation markets.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.

With $554.8 million in revenue over the past 12 months, CTS is a small player in the business services space, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and numerous distribution channels.

As you can see below, CTS grew its sales at a mediocre 4.3% compounded annual growth rate over the last five years. This shows it couldn’t generate demand in any major way and is a tough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. CTS’s recent performance shows its demand has slowed as its annualized revenue growth of 2.3% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs.

This quarter, CTS reported year-on-year revenue growth of 10.7%, and its $139.2 million of revenue exceeded Wall Street’s estimates by 1.8%.

Looking ahead, sell-side analysts expect revenue to grow 3.2% over the next 12 months, similar to its two-year rate. This projection doesn't excite us and suggests its newer products and services will not catalyze better top-line performance yet.

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Adjusted Operating Margin

CTS’s adjusted operating margin has been trending up over the last 12 months and averaged 16.5% over the last five years. On top of that, its profitability was top-notch for a business services business, showing it’s an well-run company with an efficient cost structure.

Analyzing the trend in its profitability, CTS’s adjusted operating margin might fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, CTS generated an adjusted operating margin profit margin of 17.2%, up 2.6 percentage points year on year. This increase was a welcome development and shows it was more efficient.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

CTS’s EPS grew at 11.6% compounded annual growth rate over the last five years, higher than its 4.3% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For CTS, its two-year annual EPS growth of 7.9% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q1, CTS reported adjusted EPS of $0.62, up from $0.44 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects CTS’s full-year EPS of $2.41 to grow 2.9%.

Key Takeaways from CTS’s Q1 Results

It was good to see CTS beat analysts’ EPS expectations this quarter. We were also happy its revenue outperformed Wall Street’s estimates. On the other hand, its full-year EPS guidance was in line. Overall, we think this was a solid quarter with some key areas of upside. The stock traded up 1.4% to $55 immediately after reporting.

CTS put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).