What is Trailing 12 Months (TTM)?
Trailing 12 Months (TTM) describes the past 12 consecutive months of a company’s performance data used for reporting financial figures. These figures provide a more current snapshot of a business’s financial performance compared to annual filings and reports, which might include data that is almost a year old. TTM figures are crucial for understanding whether the growth is current and seasonally adjusted.
The 12 months studied do not necessarily align with a fiscal-year ending period. TTM metrics can include earnings, EPS, P/E ratios, and yield.
Key Takeaways
- Current Financial Metrics: TTM provides the most recent 12-month performance data of a company.
- Seasonally Adjusted: Offers a current, seasonally adjusted perspective.
- Consistent Evaluation: Helps to consistently evaluate financials internally and externally regardless of fiscal year-end.
- Smoothed Inconsistencies: Smooths away inconsistencies, showing a more accurate trajectory.
Dissecting the Concept of Trailing 12 Months (TTM)
Analysts and investors employ TTM to scrutinize various aspects of financial data, including balance sheets, income statements, and cash flows. The formula for calculating TTM figures can differ across financial statements.
In the realm of equity research, some analysts report earnings quarterly, while others do so annually. Still, daily investors might find TTMs more relevant as they provide current and seasonally adjusted measures.
Utilizing TTM Metrics
TTM Revenue
TTM Revenue is a critical measure of a company’s top-line growth over the trailing 12 months. Here’s how you can calculate it:
TTM Revenue = Sum of previous four quarters' revenues
Example Calculation:
If XYZ Corp. reported $29.4B in Q1, $33.5B in Q4, $30B in Q3, and $21.9B in Q2, then:
TTM Revenue = $29.4 + $33.5 + $30 + $21.9
Trail revenue = $114.8B
TTM Yield
TTM Yield analyzes mutual fund or ETF performance by measuring the total income returned to investors over the past 12 months. It can apply to both dividend yields and bond yields.
To calculate a stock’s TTM yield, consider a stock priced at $100 and paying a $0.10 quarterly dividend over the last four quarters:
TTM Yield = (0.10 + 0.10 + 0.10 + 0.10) / $100 = 0.4%
TTM Price/Earnings Ratio
The TTM Price/Earnings ratio leverages the most recent 12 months of earnings to provide a relative valuation of a company’s stock:
TTM P/E Ratio = Current Share Price / TTM EPS
This ratio provides a reliable measure that can compare with forward P/E ratios derived from projected earnings.
Calculation Methods for TTM
Calculations for TTM figures will vary based on the financial metric considered, typically summing the figures for the last 12 months or four quarters.
Is TTM the Same as Last Twelve Months?
Yes, Last 12 Months (LTM) is another term commonly used interchangeably with Trailing 12 Months (TTM).
Trailing 12 Months Profit & Loss Analysis
A TTM P&L statement reflects how an investment or project performed over the last 12-month period. This metric averages monthly or quarterly returns to report a weighted average profit/loss.
Conclusion
Trailing 12 Months (TTM) figures offer crucial insight into a company’s recent performance and trajectory by encapsulating the last year’s metrics. These are invaluable in comparing the performance of similar companies and understanding trends in revenue, stock returns, dividend yield, price-earnings ratio, and earnings per share.
Related Terms: Fiscal Year End, Earnings Per Share, Price/Earnings Ratio, Depreciation, Forward P/E, Weighted Average, Cash Flow.
