Foolish Forecast: Show Me the Money, TTM

When time to market is important, you can turn to Motley Fool Stock Advisor pick TTM Technologies (Nasdaq: TTMI  ) for quick turnaround on a circuit-board order. There's another kind of deadline for the company this week, because the fourth-quarter results are due for a presentation on Thursday night.

Take a peek at the third quarter's results, then come back here for a fresh look at the situation. Will TTM have us at hello?

What Fools say:
Here's how TTM's CAPS scoring rates against some of its peers and competitors:

	Market Cap (millions)	Trailing	CAPS Rating
Flextronics International (NASDAQ:FLEX)	$9,410	N/A	*****
Jabil Circuit (:JBL)	$3,000	31.6	***
Sanmina-SCI (NASDAQ:SANM)	$899	N/A	*
TTM Technologies	$425	15.2	***
DDi (NASDAQ:DDIC)	$95	N/A	N/A
Merix (NASDAQ:MERX)	$57	N/A	**

Data taken from Motley Fool CAPS on 02/06/2008.

The only real direct competition in the table above comes from Merix and DDi, which also make raw circuit boards. The others mostly place components on those boards, and while they do live in the same circuit-board-related neck of the woods, they're often TTM's customers.

There hasn't been a negative CAPS comment on TTM since 2006, but the bulls have chimed in more recently. One player sees a "cautious and consistently well run company," where the future depends on who TTM acquires overseas. Another CAPSer simply sees more promise than risk in the stock today.

What management says:
A couple of weeks ago, TTM filed a shelf registration with the SEC. "The filing of the shelf registration at this time enables the company to have flexibility in evaluating opportunities in the future," explained CEO Kent Alder. The registration will allow the company to issue as much as $200 million in stock, debt certificates, or warrants in the next three years. That could be a seriously dilutive move, but it's also the kind of financing structure you'd need to pull off something like another Tyco (NYSE: TYC  ) acquisition. Big plans, Kent?

What management does:
When TTM took the integrated-circuits group off Tyco's hands back in October 2006, revenue doubled immediately, but margins dropped across the board. In an ideal long-term view, customers from Tyco's massive customer list get exposed to the TTM way of delivering advanced products very quickly, thus igniting higher-margin contracts in new places. We're still waiting for those synergies to kick in, unfortunately.

Margins	7/2006	10/2006	12/2006	4/2007	7/2007	10/2007
Gross	26.5%	28%	25.2%	22.7%	20.4%	19%
Operating	16.6%	18.9%	15%	12.7%	10.3%	8.9%
Net	15.5%	17%	9.5%	7.3%	5.4%	4.3%
FCF/Revenue	12.4%	12%	5.1%	7.8%	6.7%	6.3%

Y-O-Y Growth	7/2006	10/2006	12/2006	4/2007	7/2007	10/2007
Revenue	15.2%	22%	53.7%	86.4%	104.3%	124.2%
Earnings	87.7%	162.5%	13.6%	(1.4%)	(28.6%)	(42.8%)

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Or should I say, "fortunately"? Since the Tyco deal, Mr. Market has been going loco over TTM, with wild mood swings either way. I just have to uncork another chart on you:

	Apr 27	Jul 20	Aug 03	Nov 02	Jan 18	Feb 05
Share Price	$9.55	$14.04	$10.05	$14.00	$8.31	$9.92
Change		47%	(28%)	39%	(41%)	19%

And nobody knows whether we're in the middle of another 40% upswing right now, or slithering up to the edge of another steep cliff. It's just too hard to get a read on what the future really looks like.

So I'd suggest that we look for another deep discount -- preferably one that isn't based on serious bad news -- and then decide what to believe. If and when the high-margin conversions start to roll in, the Street will see real numbers rather than guesstimates, and TTM may well be richly rewarded. But if it takes too long, TTM will look like another also-ran, stuck in a morass of low margins and high volumes.

The Tyco people joined the band in the year-ago quarter, so management should be able to give us some fairly comparable margin readings here. And that's the story that matters. It's not show "friends." It's show business.