Growth Accelerates but Valuation Stretch Persists for TTMI

What happened

TTM Technologies reported Q2 2026 revenue growth of 37.4% year-over-year, driven by a 91% surge in data center and networking sales and double-digit growth in aerospace and defense, with record adjusted EPS of $0.99 and six consecutive quarters of margin expansion. This confirms the company's successful pivot toward high-reliability AI infrastructure and defense markets, as highlighted in the DeepValue master report. However, that report also flagged that the stock trades at roughly 52 times trailing earnings and about nine times a conservative DCF estimate of $6.73 per share. The new results likely push the price-earnings ratio higher if the stock has appreciated further, leaving the risk-reward still skewed to the downside. While the operating story is improving, the valuation remains disconnected from fundamentals.

Implication

The Q2 2026 results validate the company's strategic shift toward AI and defense, but they do not alleviate the core concern that the stock is trading at extreme multiples relative to any reasonable intrinsic value estimate. Even after the earnings beat, TTMI likely remains priced for sustained hyper-growth and margin expansion that may be difficult to maintain given the cyclical and capital-intensive nature of the PCB industry. The DeepValue report's DCF of $6.73 per share, while conservative, highlights the enormous gap between market price and fundamental value, suggesting that investors are paying a premium for a story that may not fully materialize. Furthermore, risks around customer concentration, execution on new capacity, and potential defense budget shifts remain significant and are not adequately compensated by the current valuation. Therefore, existing holders should consider taking profits, and new investors should wait for a meaningful pullback or evidence of durable, subsidized contracts that could justify the premium before establishing a position.

Thesis delta

The new Q2 2026 results reinforce the company's operational momentum and validate the growth narrative we identified in the master report. However, the valuation remains at extreme levels, and the report's STRONG SELL rating is unchanged; if anything, further price appreciation would only increase the downside risk. The primary thesis shift is an increased conviction in the operational execution, but no change to the valuation-driven sell recommendation.