Core Viewpoint - CTS is currently viewed as a better value opportunity compared to OSI Systems based on various financial metrics and earnings outlook [1][7]. Valuation Metrics - CTS has a forward P/E ratio of 21.24, while OSI Systems has a higher forward P/E of 26.21 [5]. - The PEG ratio for CTS is 1.33, indicating a more favorable valuation relative to its expected earnings growth compared to OSI's PEG ratio of 2.24 [5]. - CTS has a P/B ratio of 2.7, significantly lower than OSI's P/B ratio of 5.34, suggesting that CTS is more undervalued in terms of its book value [6]. Earnings Outlook - CTS is experiencing an improving earnings outlook, which contributes positively to its Zacks Rank of 2 (Buy), while OSI Systems holds a Zacks Rank of 3 (Hold) [3][7].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 1-4639 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2025 OR Indiana 35-0225010 (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identificati ...

CTI initiated coverage on CTS Corporation ( CTS ) previously. Revisiting our investment thesis after 3 fiscal years, we continue to maintain Overweight on CTS with a Buy rating of $62.80, implying a c.16% upside as of the date ofWe are a Singapore-based research team that seeks to exploit market inefficiencies and source for undervalued opportunities to generate long-term alpha. Unafraid to disagree with the consensus, we strive to generate investment theses based on attractive valuations across our investm ...

Core Viewpoint - Investors in the Electronics - Miscellaneous Components sector should consider CTS and OSI Systems as potential undervalued stocks, with CTS currently appearing to be the superior option based on various valuation metrics and earnings estimate revisions [1]. Valuation Metrics - CTS has a forward P/E ratio of 23.24, while OSI Systems has a forward P/E of 25.30, indicating that CTS may be more attractively priced relative to its earnings [5]. - The PEG ratio for CTS is 1.45, compared to OSI Systems' PEG ratio of 2.16, suggesting that CTS offers better value when considering expected earnings growth [5]. - CTS has a P/B ratio of 2.95, while OSI Systems has a P/B of 5.15, further supporting the notion that CTS is undervalued relative to its book value [6]. Analyst Outlook - CTS holds a Zacks Rank of 2 (Buy), indicating a more favorable earnings estimate revision trend compared to OSI Systems, which has a Zacks Rank of 3 (Hold) [3]. - The stronger estimate revision activity for CTS suggests an improving analyst outlook, making it a more attractive option for value investors [7].

Core Viewpoint - CTS has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook based on an upward trend in earnings estimates, which significantly influences stock prices [1][2]. Earnings Estimates and Stock Price Impact - The Zacks rating system is effective for individual investors as it focuses on earnings estimate revisions, which are strongly correlated with near-term stock price movements [2][3]. - Institutional investors rely on earnings estimates to determine the fair value of stocks, leading to buying or selling actions that affect stock prices [3]. Business Improvement Indicators - Rising earnings estimates and the Zacks rating upgrade for CTS suggest an improvement in the company's underlying business, which could lead to higher stock prices as investors respond positively [4]. Importance of Earnings Estimate Revisions - Empirical research supports the correlation between earnings estimate revisions and stock movements, making it beneficial for investors to track these revisions for investment decisions [5]. - The Zacks Rank system utilizes four factors related to earnings estimates to classify stocks, with a strong historical performance of Zacks Rank 1 stocks averaging a +25% annual return since 1988 [6]. Current Earnings Estimates for CTS - CTS is projected to earn $2.41 per share for the fiscal year ending December 2026, with no year-over-year change, while the Zacks Consensus Estimate has increased by 0.4% over the past three months [7]. Zacks Rating System Overview - The Zacks rating system maintains a balanced distribution of "buy" and "sell" ratings across over 4,000 stocks, with only the top 5% receiving a "Strong Buy" rating [8]. - CTS's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [9].

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell even higher, with the expectation that established trends will continue [1]. Company Overview: CTS - CTS currently holds a Momentum Style Score of B, indicating potential as a solid momentum pick [3]. - The company has a Zacks Rank of 2 (Buy), which is associated with strong historical performance when combined with a Style Score of A or B [4]. Price Performance - CTS shares have increased by 8.5% over the past week, significantly outperforming the Zacks Electronics - Miscellaneous Components industry, which rose by only 0.87% [6]. - Over the past month, CTS's stock price has risen by 17.6%, compared to the industry's 0.81% [6]. - In the last quarter, CTS shares have surged by 41.28%, while the S&P 500 has only moved by 0.02% [7]. - Over the past year, CTS has gained 22.41%, outperforming the S&P 500's 14.21% increase [7]. Trading Volume - CTS's average 20-day trading volume is 194,427 shares, which serves as a bullish indicator when combined with rising stock prices [8]. Earnings Outlook - In the last two months, one earnings estimate for CTS has increased, while none have decreased, raising the consensus estimate from $2.40 to $2.41 [10]. - For the next fiscal year, one estimate has also moved upwards with no downward revisions [10]. Conclusion - Given the positive momentum indicators and earnings outlook, CTS is positioned as a 2 (Buy) stock with a Momentum Score of B, making it a noteworthy option for investors seeking short-term gains [11][12].

Company Performance - CTS has achieved a year-to-date performance increase of approximately 32.8%, significantly outperforming the average return of -2.1% for the Computer and Technology sector [4] - The Zacks Consensus Estimate for CTS' full-year earnings has increased by 0.4% over the past quarter, indicating an improving earnings outlook [3] Industry Comparison - CTS is part of the Electronics - Miscellaneous Components industry, which consists of 26 stocks and currently ranks 52 in the Zacks Industry Rank. This industry has seen an average gain of 8% so far this year, with CTS outperforming this average [5] - Another notable stock in the Computer and Technology sector is KLA (KLAC), which has increased by 19.4% year-to-date and belongs to the Electronics - Miscellaneous Products industry, currently ranked 57 [4][6]

Group 1 - The article does not provide any relevant content regarding the company or industry [1]

Financial Data and Key Metrics Changes - For Q4 2025, the company reported sales of $137 million, a 9% increase year-over-year, with diversified end markets growing 16% [4][21] - Full-year sales reached $541 million, up 5% from $515 million in 2024, with diversified end market sales accounting for 59% of overall revenue in Q4 [4][22] - The adjusted diluted earnings per share for Q4 were $0.62, up from $0.50 in Q4 2024, while full-year adjusted diluted earnings were $2.23, compared to $2.12 in 2024 [6][23] Business Line Data and Key Metrics Changes - Medical end market sales increased by 41% in Q4 compared to the prior year, with full-year sales at $85 million, up 21% from $70 million in 2024 [7][22] - Aerospace and defense sales for 2025 were $83 million, a 20% increase from $69 million in 2024, although Q4 sales were down 4% year-over-year [9][22] - Industrial end market sales rose 16% in Q4 compared to the prior year, with full-year sales at $140 million, up 12% from $125 million in 2024 [11][22] Market Data and Key Metrics Changes - The transportation market faced challenges, with sales of $234 million in 2025, down 7% from $250 million in 2024, and Q4 sales were essentially flat at $56 million [14][22] - The North American light vehicle market is expected to be in the $15-$16 million unit range, while European production is forecasted at $16-$17 million, and China volumes are expected to be around $32 million [17] Company Strategy and Development Direction - The company is focused on diversification to drive growth and margin expansion, with an emphasis on vehicle powertrain-agnostic solutions [59] - The strategic initiative "Evolution 2030" aims to enhance growth, operational rigor, and community engagement [59] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth momentum across diversified markets, with expectations for solid demand in medical and industrial sectors [16][18] - For 2026, the company anticipates sales in the range of $550-$580 million and adjusted diluted EPS between $2.30 and $2.45, assuming current market conditions persist [18] Other Important Information - The company generated $29 million in operating cash flow for Q4 and $102 million for the full year, maintaining a strong balance sheet with a cash balance of $82 million [23] - The company repurchased approximately 1.4 million shares totaling $57 million in 2025, returning $62 million to shareholders through dividends and buybacks [24] Q&A Session Summary Question: Insights on smart actuator customer preferences - Management confirmed ongoing development on both legacy and new platforms, with enhancements in cost-production efforts expected [30][31] Question: New product expectations for 2026 - Management highlighted approximately $100 million in new business awards and advancements in current sensing technologies [32] Question: Revenue impact from SyQwest and government funding - Management noted that revenue was lighter than expected due to timing of government funding but anticipates normalization in 2026 [38] Question: Visibility in industrial opportunities - Management indicated improving visibility and steady growth in industrial bookings, with a book-to-bill ratio of 1.11 [41] Question: Assessment of the transportation market - Management expressed a conservative outlook, suggesting the market may be bottoming out, with expectations for a mixed performance in light vehicle sales [42][43] Question: M&A market opportunities - Management is actively working on the M&A pipeline, focusing on diversification and niche technologies, but noted that valuations remain high [46] Question: Market assessment outside transportation - Management reported good momentum across diversified markets, with no significant concerns in any regions [48]

Financial Data and Key Metrics Changes - For Q4 2025, the company reported sales of $137 million, a 9% increase year-over-year, with diversified end markets growing 16% [4][18] - The full year sales reached $541 million, up 5% from $515 million in 2024, with diversified end market sales accounting for 59% of overall revenue in Q4 [4][19] - The adjusted diluted earnings per share for Q4 were $0.62, up from $0.50 in Q4 2024, and for the full year, adjusted diluted earnings were $2.23, compared to $2.12 in 2024 [5][20] Business Line Data and Key Metrics Changes - Medical end market sales increased by 41% in Q4 2025, reaching $85 million for the full year, up 21% from $70 million in 2024 [6][7] - Aerospace and defense sales for 2025 were $83 million, a 20% increase from $69 million in 2024, although Q4 sales were down 4% due to program timing [9][10] - Industrial end market sales rose 16% in Q4 compared to the prior year, with full year sales at $140 million, up 12% from $125 million in 2024 [11][12] - Transportation sales were $234 million for 2025, down 7% from $250 million in 2024, with Q4 sales essentially flat at $56 million [13][14] Market Data and Key Metrics Changes - The company noted strong demand across diversified markets, with no significant concerns reported in any geographic areas [31] - The North American light vehicle market is expected to be in the $15-$16 million unit range, while European production is forecasted at $16-$17 million, and China volumes are expected to be around $32 million [16] Company Strategy and Development Direction - The company is focused on diversification as a strategic priority to drive growth and margin expansion, particularly in vehicle powertrain-agnostic solutions [34] - The Evolution 2030 strategic initiative emphasizes growth, operational rigor, and community engagement [34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth momentum across diversified markets, with expectations for solid demand in medical and industrial sectors [15][17] - For 2026, the company anticipates sales in the range of $550-$580 million and adjusted diluted EPS between $2.30 and $2.45, assuming current market conditions persist [17] Other Important Information - The company generated $29 million in operating cash flow for Q4 and $102 million for the full year, maintaining a strong balance sheet with a cash balance of $82 million [20][21] - The company repurchased approximately 1.4 million shares totaling $57 million in 2025, returning $62 million to shareholders through dividends and buybacks [21] Q&A Session Summary Question: Insights on smart actuator customer preferences - Management confirmed ongoing development on both legacy and new platforms, enhancing cost-production efforts [22][23] Question: Revenue guidance and new product introductions - Management indicated that new products are contributing to revenue growth, with significant awards secured in Q4 [23][27] Question: Assessment of SyQwest revenue timing - Management noted that revenue was lighter than expected due to government funding timing but anticipates normalization in 2026 [25][26] Question: Visibility in industrial opportunities - Management expressed improved visibility and steady growth in industrial bookings, with a book-to-bill ratio of 1.11 [28] Question: Transportation market outlook - Management remains cautious but optimistic about potential improvements in the transportation sector, particularly in the second half of 2026 [29] Question: M&A market opportunities - Management is actively pursuing diversification and niche technologies but noted that valuations remain high [30] Question: Overall assessment of diversified markets - Management reported good momentum across diversified markets, with no significant concerns in any regions [31][32]