TTM Technologies: Big Transformation, No Margin of Safety
Tips E-24: A 1-minute summary of my fundamental analysis of TTM Technologies Inc. (NASDAQ: TTMI)
Investment Thesis
TTMI now focuses on advanced PCBs and mission-critical systems rather than commoditized consumer electronics. Despite this strategic progress, persistent cost-control issues and subpar returns on capital mean the transformation has not translated into sustainable shareholder value.
Main Business
The company products are used in aerospace and defense platforms, data center infrastructure, and automotive electronics. These markets feature higher reliability requirements and longer product cycles, supporting differentiation but demanding disciplined execution and cost management.
Growth
From 2015 to 2024, revenue grew only about 1.7% CAGR as TTMI divested consumer-facing units and shut down commoditized operations. Underlying demand improved, evidenced by 9.4% growth in 2024 when no divestitures occurred, suggesting better organic potential going forward.
Profitability
Margins improved structurally, but weak fixed-cost control continues to constrain returns and earnings stability.
Financial Strength
TTMI maintains a healthy cash buffer, reduced leverage materially since 2015, and generated positive operating cash flow annually. Yet most cash have been reinvested into acquisitions and capex, leaving little surplus for shareholders.
Peer Performance
Compared with global PCB and interconnect peers, TTMI generally ranks in the bottom half for ROIC and EBIT margins. Its unlevered free cash flow margin has been comparatively strong, but this strength has not translated into durable earnings growth or superior returns.
Valuation
Even assuming double-digit revenue growth, margin expansion, and improved cost discipline, there is no margin of safety and execution risks remains
For more insights and valuation details, refer to the original article on Seeking Alpha titled TTM Technologies' New Business Focus: Hot Story, Cold Returns
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Disclaimer & DisclosureI am not an investment adviser, security analyst, or stockbroker. The contents are meant for educational purposes and should not be taken as any recommendation to purchase or dispose of shares in the featured companies. Investments or strategies mentioned on this website may not be suitable for you and you should have your own independent decision regarding them.
The opinions expressed here are based on information I consider reliable but I do not warrant its completeness or accuracy and should not be relied on as such.
I may have equity interests in some of the companies featured.
This blog is reader-supported. When you buy through links in the post, the blog will earn a small commission. The payment comes from the retailer and not from you.
Disclaimer & Disclosure
I am not an investment adviser, security analyst, or stockbroker. The contents are meant for educational purposes and should not be taken as any recommendation to purchase or dispose of shares in the featured companies. Investments or strategies mentioned on this website may not be suitable for you and you should have your own independent decision regarding them.
The opinions expressed here are based on information I consider reliable but I do not warrant its completeness or accuracy and should not be relied on as such.
I may have equity interests in some of the companies featured.
This blog is reader-supported. When you buy through links in the post, the blog will earn a small commission. The payment comes from the retailer and not from you.
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