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Why TTM Technologies, Inc. Shares Have Jumped Nearly 14% Higher Today

By Anders Bylund – Aug 2, 2018 at 1:12PM

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Investors looked past soft second-quarter revenues to focus on a strong bottom-line performance.

What happened

Shares of TTM Technologies (TTMI -0.18%) rose as much as 13.6% higher on Thursday morning thanks to a strong second-quarter earnings report. By 1:30 p.m. EDT, the stock had cooled down somewhat to an 11.7% gain above Wednesday's closing prices.

So what

In the second quarter, the printed circuit board manufacturer saw top-line revenues rise 14% year over year to land at $717 million. Adjusted earnings jumped 55% higher over the same period, stopping at $0.48 per diluted share. Analysts had been looking for earnings near $0.37 per share on sales in the neighborhood of $729 million, so TTM crushed the earnings target while falling short of the consensus revenue projection.

Looking to the third quarter, the midpoints of management's guidance ranges pointed to non-GAAP earnings of roughly $0.44 per share on revenues of approximately $750 million. The current Street view calls for third-quarter earnings near $0.42 per share on $752 million in top-line sales, making for another mixed quarter if TTM delivers exactly what its management expects.

Investors shrugged off the soft revenue trends to focus on strong earnings instead.

A close-up rendering at an angle of a blue and purple printed circuit board.

Image source: Getty Images.

Now what

TTM is experiencing slow order flows from the cellphone industry these days, but other sectors are picking up that slack. In particular, the recent $775 million buyout of electronic components maker Anaren is boosting TTM's presence in the aerospace and networking end markets.

Overall, the company is leaning into a fresh product mix with heavier emphasis on the automotive and aerospace/defense sectors. Management sees exploding demand for printed circuit boards in modern cars as the electronic content per vehicle keeps expanding. According to TTM CEO Tom Edman, the average circuit board content per car is growing from $62 in 2016 to $75 in 2020, and some hybrid and electric vehicles already carry twice that targeted amount per car today.

TTM's stock chart has been a roller coaster ride in recent quarters, so it's no surprise to see share prices moving on a strong bottom-line performance.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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