Intrinsic value of TTM Technologies, Inc. - TTMI

Previous Close

$11.47

  Intrinsic Value

$16.22

stock screener

  Rating & Target

buy

+41%

Previous close

$11.47

 
Intrinsic value

$16.22

 
Up/down potential

+41%

 
Rating

buy

We calculate the intrinsic value of TTMI stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 1.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  2,904
  2,971
  3,047
  3,133
  3,228
  3,332
  3,445
  3,568
  3,701
  3,843
  3,995
  4,157
  4,329
  4,513
  4,707
  4,914
  5,132
  5,363
  5,607
  5,865
  6,137
  6,423
  6,725
  7,044
  7,379
  7,732
  8,104
  8,495
  8,906
  9,339
Variable operating expenses, $m
  2,669
  2,728
  2,795
  2,871
  2,954
  3,046
  3,146
  3,254
  3,370
  3,495
  3,515
  3,657
  3,809
  3,971
  4,142
  4,323
  4,515
  4,719
  4,933
  5,160
  5,399
  5,651
  5,917
  6,197
  6,493
  6,803
  7,130
  7,474
  7,836
  8,217
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  2,669
  2,728
  2,795
  2,871
  2,954
  3,046
  3,146
  3,254
  3,370
  3,495
  3,515
  3,657
  3,809
  3,971
  4,142
  4,323
  4,515
  4,719
  4,933
  5,160
  5,399
  5,651
  5,917
  6,197
  6,493
  6,803
  7,130
  7,474
  7,836
  8,217
Operating income, $m
  235
  243
  252
  262
  274
  286
  300
  314
  330
  347
  480
  499
  520
  542
  566
  590
  617
  644
  674
  705
  737
  772
  808
  846
  887
  929
  974
  1,021
  1,070
  1,122
EBITDA, $m
  478
  489
  502
  516
  532
  549
  567
  588
  609
  633
  658
  684
  713
  743
  775
  809
  845
  883
  923
  966
  1,010
  1,058
  1,107
  1,160
  1,215
  1,273
  1,334
  1,399
  1,467
  1,538
Interest expense (income), $m
  72
  96
  98
  102
  106
  110
  115
  120
  126
  132
  138
  146
  153
  161
  170
  179
  189
  199
  210
  222
  234
  247
  261
  275
  290
  306
  323
  341
  359
  379
  399
Earnings before tax, $m
  139
  144
  150
  156
  164
  171
  180
  189
  199
  209
  334
  346
  359
  372
  386
  401
  417
  434
  452
  471
  490
  511
  533
  556
  581
  606
  633
  661
  691
  723
Tax expense, $m
  38
  39
  41
  42
  44
  46
  49
  51
  54
  56
  90
  93
  97
  101
  104
  108
  113
  117
  122
  127
  132
  138
  144
  150
  157
  164
  171
  179
  187
  195
Net income, $m
  102
  105
  110
  114
  119
  125
  131
  138
  145
  153
  244
  253
  262
  272
  282
  293
  305
  317
  330
  344
  358
  373
  389
  406
  424
  442
  462
  483
  505
  527

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  3,528
  3,610
  3,702
  3,807
  3,922
  4,049
  4,186
  4,336
  4,497
  4,669
  4,854
  5,051
  5,260
  5,483
  5,720
  5,971
  6,236
  6,516
  6,813
  7,126
  7,456
  7,805
  8,172
  8,559
  8,966
  9,395
  9,847
  10,322
  10,822
  11,347
Adjusted assets (=assets-cash), $m
  3,528
  3,610
  3,702
  3,807
  3,922
  4,049
  4,186
  4,336
  4,497
  4,669
  4,854
  5,051
  5,260
  5,483
  5,720
  5,971
  6,236
  6,516
  6,813
  7,126
  7,456
  7,805
  8,172
  8,559
  8,966
  9,395
  9,847
  10,322
  10,822
  11,347
Revenue / Adjusted assets
  0.823
  0.823
  0.823
  0.823
  0.823
  0.823
  0.823
  0.823
  0.823
  0.823
  0.823
  0.823
  0.823
  0.823
  0.823
  0.823
  0.823
  0.823
  0.823
  0.823
  0.823
  0.823
  0.823
  0.823
  0.823
  0.823
  0.823
  0.823
  0.823
  0.823
Average production assets, $m
  1,487
  1,521
  1,560
  1,604
  1,653
  1,706
  1,764
  1,827
  1,895
  1,967
  2,045
  2,128
  2,217
  2,311
  2,410
  2,516
  2,628
  2,746
  2,871
  3,003
  3,142
  3,289
  3,443
  3,606
  3,778
  3,959
  4,149
  4,349
  4,560
  4,782
Working capital, $m
  314
  321
  329
  338
  349
  360
  372
  385
  400
  415
  431
  449
  468
  487
  508
  531
  554
  579
  606
  633
  663
  694
  726
  761
  797
  835
  875
  917
  962
  1,009
Total debt, $m
  1,538
  1,590
  1,650
  1,717
  1,792
  1,873
  1,962
  2,059
  2,162
  2,274
  2,393
  2,520
  2,655
  2,799
  2,951
  3,113
  3,284
  3,465
  3,656
  3,858
  4,071
  4,296
  4,533
  4,782
  5,045
  5,322
  5,613
  5,920
  6,242
  6,581
Total liabilities, $m
  2,276
  2,328
  2,388
  2,455
  2,530
  2,611
  2,700
  2,797
  2,900
  3,012
  3,131
  3,258
  3,393
  3,537
  3,689
  3,851
  4,022
  4,203
  4,394
  4,596
  4,809
  5,034
  5,271
  5,520
  5,783
  6,060
  6,351
  6,658
  6,980
  7,319
Total equity, $m
  1,253
  1,281
  1,314
  1,351
  1,392
  1,437
  1,486
  1,539
  1,596
  1,658
  1,723
  1,793
  1,867
  1,947
  2,031
  2,120
  2,214
  2,313
  2,419
  2,530
  2,647
  2,771
  2,901
  3,038
  3,183
  3,335
  3,496
  3,664
  3,842
  4,028
Total liabilities and equity, $m
  3,529
  3,609
  3,702
  3,806
  3,922
  4,048
  4,186
  4,336
  4,496
  4,670
  4,854
  5,051
  5,260
  5,484
  5,720
  5,971
  6,236
  6,516
  6,813
  7,126
  7,456
  7,805
  8,172
  8,558
  8,966
  9,395
  9,847
  10,322
  10,822
  11,347
Debt-to-equity ratio
  1.230
  1.240
  1.260
  1.270
  1.290
  1.300
  1.320
  1.340
  1.350
  1.370
  1.390
  1.410
  1.420
  1.440
  1.450
  1.470
  1.480
  1.500
  1.510
  1.530
  1.540
  1.550
  1.560
  1.570
  1.590
  1.600
  1.610
  1.620
  1.620
  1.630
Adjusted equity ratio
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355
  0.355

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  102
  105
  110
  114
  119
  125
  131
  138
  145
  153
  244
  253
  262
  272
  282
  293
  305
  317
  330
  344
  358
  373
  389
  406
  424
  442
  462
  483
  505
  527
Depreciation, amort., depletion, $m
  244
  247
  250
  254
  258
  263
  268
  273
  279
  285
  178
  185
  193
  201
  210
  219
  228
  239
  250
  261
  273
  286
  299
  314
  329
  344
  361
  378
  397
  416
Funds from operations, $m
  345
  352
  359
  368
  377
  388
  399
  411
  424
  438
  422
  438
  455
  473
  492
  512
  533
  556
  580
  605
  631
  659
  689
  720
  752
  787
  823
  861
  901
  943
Change in working capital, $m
  6
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  18
  19
  20
  21
  22
  24
  25
  26
  28
  29
  31
  33
  34
  36
  38
  40
  42
  44
  47
Cash from operations, $m
  339
  345
  351
  359
  367
  376
  387
  398
  410
  423
  406
  420
  436
  453
  471
  490
  510
  531
  553
  577
  602
  628
  656
  685
  716
  749
  783
  819
  857
  897
Maintenance CAPEX, $m
  -127
  -129
  -132
  -136
  -139
  -144
  -148
  -153
  -159
  -165
  -171
  -178
  -185
  -193
  -201
  -210
  -219
  -228
  -239
  -250
  -261
  -273
  -286
  -299
  -314
  -329
  -344
  -361
  -378
  -397
New CAPEX, $m
  -28
  -34
  -39
  -44
  -49
  -53
  -58
  -63
  -68
  -73
  -78
  -83
  -88
  -94
  -100
  -106
  -112
  -118
  -125
  -132
  -139
  -147
  -155
  -163
  -172
  -181
  -190
  -200
  -211
  -222
Cash from investing activities, $m
  -155
  -163
  -171
  -180
  -188
  -197
  -206
  -216
  -227
  -238
  -249
  -261
  -273
  -287
  -301
  -316
  -331
  -346
  -364
  -382
  -400
  -420
  -441
  -462
  -486
  -510
  -534
  -561
  -589
  -619
Free cash flow, $m
  184
  181
  180
  179
  179
  179
  180
  181
  183
  185
  157
  159
  163
  166
  170
  174
  179
  184
  189
  195
  202
  208
  215
  223
  231
  239
  248
  258
  268
  278
Issuance/(repayment) of debt, $m
  45
  52
  60
  67
  74
  82
  89
  96
  104
  111
  119
  127
  135
  144
  153
  162
  171
  181
  191
  202
  213
  225
  237
  250
  263
  277
  291
  306
  322
  339
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  45
  52
  60
  67
  74
  82
  89
  96
  104
  111
  119
  127
  135
  144
  153
  162
  171
  181
  191
  202
  213
  225
  237
  250
  263
  277
  291
  306
  322
  339
Total cash flow (excl. dividends), $m
  230
  233
  240
  246
  254
  261
  269
  278
  287
  296
  276
  287
  298
  310
  323
  336
  350
  365
  381
  397
  415
  433
  452
  472
  494
  516
  540
  564
  590
  618
Retained Cash Flow (-), $m
  -26
  -29
  -33
  -37
  -41
  -45
  -49
  -53
  -57
  -61
  -66
  -70
  -74
  -79
  -84
  -89
  -94
  -100
  -105
  -111
  -117
  -124
  -130
  -137
  -145
  -152
  -160
  -169
  -177
  -187
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  204
  205
  207
  209
  213
  216
  220
  225
  230
  235
  210
  217
  223
  231
  239
  247
  256
  265
  275
  286
  297
  309
  322
  335
  349
  364
  379
  396
  413
  431
Discount rate, %
  7.20
  7.56
  7.94
  8.33
  8.75
  9.19
  9.65
  10.13
  10.64
  11.17
  11.73
  12.31
  12.93
  13.58
  14.26
  14.97
  15.72
  16.50
  17.33
  18.19
  19.10
  20.06
  21.06
  22.11
  23.22
  24.38
  25.60
  26.88
  28.22
  29.64
PV of cash for distribution, $m
  191
  177
  164
  152
  140
  128
  116
  104
  92
  82
  62
  54
  46
  39
  32
  27
  21
  17
  13
  10
  8
  6
  4
  3
  2
  1
  1
  1
  0
  0
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

TTM Technologies, Inc. is a manufacturer of printed circuit board (PCB) products and is focused on technologically advanced PCBs and electro-mechanical solutions (E-M Solutions). As of January 2, 2017, the Company operated a total of 25 specialized facilities in North America and China. The Company's segments include PCB, E-M Solutions and Corporate. As of January 2, 2017, the PCB segment included 13 domestic PCB fabrication plants, including a facility that provides follow-on value-added services primarily for one of the PCB fabrication plants; eight PCB fabrication plants in China and one in Canada. As of January 2, 2017, the E-M Solutions included three custom electronic assembly plants in China. The Company offers a range of PCB products, including conventional PCBs, high density interconnect (HDI) PCBs, flexible PCBs, rigid-flex PCBs, custom assemblies and system integration, and integrated circuits (IC) substrates.

FINANCIAL RATIOS  of  TTM Technologies, Inc. (TTMI)

Valuation Ratios
P/E Ratio 32.9
Price to Sales 0.5
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow 3.9
Price to Free Cash Flow 5.4
Growth Rates
Sales Growth Rate 20.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -15%
Cap. Spend. - 3 Yr. Gr. Rate -3.8%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 110.7%
Total Debt to Equity 124.2%
Interest Coverage 2
Management Effectiveness
Return On Assets 2.9%
Ret/ On Assets - 3 Yr. Avg. -0.5%
Return On Total Capital 1.8%
Ret/ On T. Cap. - 3 Yr. Avg. 0.5%
Return On Equity 4.3%
Return On Equity - 3 Yr. Avg. 1%
Asset Turnover 1
Profitability Ratios
Gross Margin 16.7%
Gross Margin - 3 Yr. Avg. 15.4%
EBITDA Margin 12.6%
EBITDA Margin - 3 Yr. Avg. 10.8%
Operating Margin 4.9%
Oper. Margin - 3 Yr. Avg. 3.8%
Pre-Tax Margin 2.6%
Pre-Tax Margin - 3 Yr. Avg. 1.6%
Net Profit Margin 1.4%
Net Profit Margin - 3 Yr. Avg. 0.4%
Effective Tax Rate 46.3%
Eff/ Tax Rate - 3 Yr. Avg. 155.7%
Payout Ratio 0%

TTMI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TTMI stock intrinsic value calculation we used $2847 million for the last fiscal year's total revenue generated by TTM Technologies, Inc.. The default revenue input number comes from 0001 income statement of TTM Technologies, Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our TTMI stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 7.2%, whose default value for TTMI is calculated based on our internal credit rating of TTM Technologies, Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of TTM Technologies, Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of TTMI stock the variable cost ratio is equal to 92%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for TTMI stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 6.4% for TTM Technologies, Inc..

Corporate tax rate of 27% is the nominal tax rate for TTM Technologies, Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the TTMI stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for TTMI are equal to 51.2%.

Life of production assets of 11.5 years is the average useful life of capital assets used in TTM Technologies, Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for TTMI is equal to 10.8%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1227.087 million for TTM Technologies, Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 104.269 million for TTM Technologies, Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of TTM Technologies, Inc. at the current share price and the inputted number of shares is $1.2 billion.

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