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- NasdaqGS:TTMI
Optimistic Investors Push TTM Technologies, Inc. (NASDAQ:TTMI) Shares Up 29% But Growth Is Lacking
TTM Technologies, Inc. (NASDAQ:TTMI) shares have continued their recent momentum with a 29% gain in the last month alone. The last month tops off a massive increase of 118% in the last year.
Even after such a large jump in price, you could still be forgiven for feeling indifferent about TTM Technologies' P/S ratio of 1.9x, since the median price-to-sales (or "P/S") ratio for the Electronic industry in the United States is also close to 2.2x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.
Check out our latest analysis for TTM Technologies
What Does TTM Technologies' Recent Performance Look Like?
There hasn't been much to differentiate TTM Technologies' and the industry's revenue growth lately. The P/S ratio is probably moderate because investors think this modest revenue performance will continue. Those who are bullish on TTM Technologies will be hoping that revenue performance can pick up, so that they can pick up the stock at a slightly lower valuation.
Keen to find out how analysts think TTM Technologies' future stacks up against the industry? In that case, our free report is a great place to start.Do Revenue Forecasts Match The P/S Ratio?
There's an inherent assumption that a company should be matching the industry for P/S ratios like TTM Technologies' to be considered reasonable.
Taking a look back first, we see that the company managed to grow revenues by a handy 12% last year. The solid recent performance means it was also able to grow revenue by 9.5% in total over the last three years. Therefore, it's fair to say the revenue growth recently has been respectable for the company.
Turning to the outlook, the next year should generate growth of 7.4% as estimated by the four analysts watching the company. Meanwhile, the rest of the industry is forecast to expand by 21%, which is noticeably more attractive.
In light of this, it's curious that TTM Technologies' P/S sits in line with the majority of other companies. It seems most investors are ignoring the fairly limited growth expectations and are willing to pay up for exposure to the stock. These shareholders may be setting themselves up for future disappointment if the P/S falls to levels more in line with the growth outlook.
The Bottom Line On TTM Technologies' P/S
TTM Technologies' stock has a lot of momentum behind it lately, which has brought its P/S level with the rest of the industry. Using the price-to-sales ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.
Given that TTM Technologies' revenue growth projections are relatively subdued in comparison to the wider industry, it comes as a surprise to see it trading at its current P/S ratio. At present, we aren't confident in the P/S as the predicted future revenues aren't likely to support a more positive sentiment for long. A positive change is needed in order to justify the current price-to-sales ratio.
Before you take the next step, you should know about the 2 warning signs for TTM Technologies that we have uncovered.
If companies with solid past earnings growth is up your alley, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.
Valuation is complex, but we're here to simplify it.
Discover if TTM Technologies might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
About NasdaqGS:TTMI
TTM Technologies
Manufactures and sells mission systems, radio frequency (RF) components and RF microwave/microelectronic assemblies, and printed circuit boards (PCB) in the United States, Taiwan, and internationally.
Excellent balance sheet with moderate growth potential.
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