Last update on 2024-06-07

TTM Technologies (TTMI) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Analyze TTM Technologies' (TTMI) financial health using the Piotroski F-Score with an in-depth review of their 2023 performance scoring 5 out of 9.

Short Analysis - Piotroski Score: 5

We're running TTM Technologies (TTMI) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score analysis evaluates TTM Technologies (TTMI) on various aspects like profitability, liquidity, and operating efficiency using 9 criteria. TTMI secures a score of 5 out of 9 which is a middle-ground score. Profitability: TTMI faces challenges with a negative net income and declining ROA (earning 0 points for each). However, it performs well in other profitability areas such as maintaining a positive cash flow and having an operating cash flow higher than net income. Liquidity: TTMI shows improved liquidity with a growing current ratio (scoring 1 point). However, the company's leverage increased, indicating higher debt (scoring 0 points). Operating Efficiency: TTMI displays slight improvement in gross margin and an unusual reduction in outstanding shares to zero, earning points here. It lost points for declining asset turnover ratio.

Insights for Value Investors Seeking Stable Income

TTMI presents a mixed bag for investors. The company's ability to generate positive cash flow and a growing current ratio is promising. However, the negative net income, declining ROA, and increased leverage are concerning. Therefore, it’s worth a closer look but be cautious and consider engaging in more detailed analysis or consulting with a financial advisor before making an investment decision in TTM Technologies.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of TTM Technologies (TTMI)

Company has a positive net income?

Net income indicates the profitability of a company after all expenses have been deducted from total revenue.

In 2023, TTM Technologies reported a net income of -$18,718,000, which is a worrying sign as the company is operating at a loss for the year. Historically, TTM Technologies has seen fluctuations in net income with significant losses in years such as 2012 and 2008. However, the net income has also seen commendable years such as 2018 and 2019 with $173,584,000 and $177,535,000 in profits, respectively. The negative net income in 2023 indicates a troubling trend, hence adding 0 points for this criterion.

Company has a positive cash flow?

Positive Cash Flow from Operations (CFO) signifies that a company is generating sufficient cash through its core business activities, which is essential for its long-term sustainability.

In 2023, TTM Technologies (TTMI) reported a CFO of $187,284,000, which is indeed positive. This indicates that TTMI is generating adequate cash from its operational activities, underscoring the financial health and efficiency of its core operations. Looking at the historical data, we see that TTMI has consistently maintained positive CFO over the past 20 years, barring some fluctuations. Overall, this trend is favorable and reflects the company’s robust ability to generate cash from its primary business activities.

Return on Assets (ROA) are growing?

Return on Assets (ROA) compares a company's annual earnings to its total assets, indicating how efficiently management is using its assets to generate earnings.

For TTM Technologies (TTMI), the ROA declined from 0.0298 in 2022 to -0.0056 in 2023. This is a negative trend as it indicates a drop in profitability relative to assets. The decline suggests that the company hasn't efficiently used its assets in the most recent year to generate earnings, since the ROA has turned negative. Historically, TTMI's operating cash flow has fluctuated, reaching a peak in 2017 at 332,755,000. However, the company is currently underperforming compared to its industry's median ROA, which stood at 0.2104 in 2023. This implies managerial inefficiency or external challenges specific to the company, setting the score to 0.

Operating Cashflow are higher than Netincome?

This criterion evaluates whether a company's operating cash flow is greater than its net income. Higher operating cash flow than net income can be an indicator of good earnings quality and efficient business operations.

In the year 2023, TTM Technologies (TTMI) reported an operating cash flow of $187.28 million and a net income of -$18.72 million. Here, the operating cash flow exceeds net income by a significant margin. This disparity indicates that the company's capacity to generate cash from its core operations remains robust despite bottom-line losses. This positive spread is a promising signal for the company's earning quality and operational efficiency. Examining the 20-year data trend, while net income figures have fluctuated dramatically, with some years showing losses and others substantial profits, the operating cash flow has remained more stable and consistently positive. For instance, during the turbulent period of 2008 (net income: -$35.27 million) or 2012 (net income: -$174.595 million), the firm still maintained strong operating cash flows of $75.518 million and $182.565 million, respectively. This highlights a strong ability of TTM Technologies to convert operations into cash. Therefore, TTM Technologies earns 1 point for this criterion.

Liquidity of TTM Technologies (TTMI)

Leverage is declining?

Change in Leverage reflects a company's debt management efficiency, influencing financial stability and risk levels.

The leverage for TTM Technologies has increased from 0.2724 in 2022 to 0.3033 in 2023. This increase in leverage indicates that the company is taking on more debt relative to its equity. Over the last 20 years, TTM's leverage has fluctuated, with notable peaks up to 0.423 in 2018 and troughs down to 0 in 2004 and 2005. The current upward trend in leverage could be a sign of increased financial risk if it continues, which is generally viewed negatively. Hence, for Piotroski's F-Score, this criterion would score 0 points.

Current Ratio is growing?

Discuss the significance of the current ratio in financial analysis and why it matters for TTM Technologies (TTMI).

The current ratio for TTM Technologies (TTMI) in 2023 stands at 2.0309, an increase from 1.9611 in 2022. This positive change is crucial as it indicates improved liquidity position. Specifically, companies with higher current ratios can handle short-term liabilities more efficiently. Comparing the 2023 figure to the industry median current ratio of 2.0742, TTMI is slightly below the industry norm but has shown improvement from the previous year.

Number of shares not diluted?

Evaluates the change in shares outstanding to determine if the company is buying back shares, which can be a sign of value.

The Outstanding Shares for TTM Technologies (TTMI) in 2022 were 102,074,000, compared to 0 in 2023. This indicates an unusual situation as the shares outstanding have drastically decreased to zero – which is not typical for any company. Normally, a decrease in outstanding shares, if recorded, would add a point indicating a positive sign as it could be due to share buybacks, which is often a value-enhancing strategy. However, reducing the count to zero might indicate either a reporting error or another situation that needs clarification. The historical data shows fluctuating trends with a peak in 2017 at 134,036,000 shares and a general trend of increasing shares until 2018. The extreme drop to zero must be critically examined, but under the Piotroski criteria, this situation warrants 1 point as the decrease is substantial.

Operating of TTM Technologies (TTMI)

Cross Margin is growing?

Change in Gross Margin reflects the company’s ability to control its production costs relative to its revenue.

TTM Technologies (TTMI) has reported a slight increase in Gross Margin from 0.1835 in 2022 to 0.1851 in 2023. This improvement, though marginal, is beneficial for the company as it indicates a slight enhancement in its efficiency in managing production costs relative to revenue. Historically, TTMI's Gross Margin has shown fluctuations, peaking at 0.2848 in 2004 but experiencing lows like 0.1469 in 2014. In comparison, the industry median gross margin for 2023 stands at 0.2104, which is still higher than TTMI's margin. Nevertheless, the consistency seen in recent years with a positive trend is a good sign. Thus, for this criterion, TTMI scores 1 point as there has been an increase in the Gross Margin.

Asset Turnover Ratio is growing?

Asset Turnover measures a firm's efficiency at using its assets to generate revenue.

TTM Technologies' Asset Turnover decreased from 0.7859 in 2022 to 0.6717 in 2023. This decline suggests the company has become less efficient at generating revenue from its assets. Studying the historical trend, TTMI's Asset Turnover has been fluctuating over the last two decades, peaking at 1.2909 in 2008 and demonstrating a generally declining trend thereafter. The most recent decline could raise concerns among the investors and analysts as it implies that the company might be facing operational challenges or inefficiencies that need to be addressed.