TTM Technologies Inc (TTMI, Financial), a leading manufacturer of printed circuit boards, has recently shown a day gain of 12.45%, despite a 3-month loss of -10.06%. With an Earnings Per Share (EPS) of 0.49, the stock prompts an intriguing question: Is it modestly undervalued? This article delves into a comprehensive valuation analysis to answer this question. Let's explore TTM Technologies' financial performance and intrinsic value.
Company Profile
TTM Technologies Inc is a U.S.-based company that primarily manufactures printed circuit boards. Generating roughly half of its revenue domestically, the company is divided into two segments: printed circuit boards and RF&S Components. TTM Technologies' products are widely used in manufacturing, networking, telecommunications, computing, aerospace, and medical fields. With a current stock price of $12.92 and a GF Value of $15.63, TTM Technologies seems to be modestly undervalued. This valuation discrepancy sets the stage for a deeper examination of the company's value.
Understanding the GF Value
The GF Value is a unique measure of a stock's intrinsic value, calculated based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. The GF Value Line represents the fair trading value of the stock. If the stock price significantly deviates from the GF Value Line, it indicates that the stock is either overvalued or undervalued. For TTM Technologies, the GF Value suggests that the stock is modestly undervalued, implying a higher future return than its business growth.
Financial Strength Analysis
Financial strength is a critical aspect to consider before investing in a company. A company's cash-to-debt ratio and interest coverage can provide valuable insights into its financial health. TTM Technologies' cash-to-debt ratio is 0.45, ranking worse than 74.94% of companies in the Hardware industry. With an overall financial strength score of 6 out of 10, TTM Technologies' financial health is deemed fair.
Profitability and Growth Evaluation
Profitability is another crucial factor in company valuation. TTM Technologies has been profitable 9 out of the past 10 years, with a revenue of $2.40 billion and an Earnings Per Share (EPS) of $0.49 over the past twelve months. Its operating margin of 5.57% ranks better than 58.71% of companies in the Hardware industry. With a profitability rank of 6 out of 10, TTM Technologies exhibits fair profitability.
Furthermore, a company's growth plays a key role in its valuation. TTM Technologies' 3-year average revenue growth rate is better than 55.41% of companies in the Hardware industry. However, its 3-year average EBITDA growth rate of 3.3% ranks worse than 63.77% of companies in the industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) to its weighted average cost of capital (WACC) can provide insights into its profitability. TTM Technologies' ROIC of 2.14% falls short of its WACC of 7.07%, indicating a potential risk for shareholders.
Conclusion
In conclusion, TTM Technologies (TTMI, Financial) appears to be modestly undervalued. The company's fair financial condition and profitability, coupled with its growth challenges, present a mixed investment prospect. To learn more about TTM Technologies, you can explore its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
