TTM: What is TTM in Stock & How to Calculate TTM

A better method of analyzing the financial statements simultaneously remains using TTM or trailing twelve months for each period you analyze. Using the TTM figures allows you to determine the most current calculation of the P/E ratio. We can calculate the ratio by dividing the current market price by the company’s trailing twelve-month earnings per share. This gauge, which is also sometimes called trailing P/E, shows P/E ratio of business for preceding 12 months. It is computed by dividing stock price as of right now by last four quarters’ profits per share (EPS).

However, this figure is often overshadowed by a company’s profitability and capability to generate earnings before interest, tax, depreciation, and amortization (EBITDA). Trailing twelve months (TTM) figures include the financial metrics for the last four quarters, which amounts to a full year of business performance. Trailing twelve months is also used when calculating other metrics, such as the PE ratio, dividend yield, earnings per share, and more. Investors often perform hands-on calculations of various financial metrics, including trailing 12 months (TTM), in spreadsheets like Excel. The first way is to look up the company’s up-to-date financials on their website and then calculate financial ratios for them manually using their specific formulas.

When valuing a company, the primary imperative is to use the most up-to-date numbers we can find. But the accounting inputs we use come from accounting statements such as the income ttm meaning in share market statement, and those don’t update constantly. In closing, the TTM financial data reflects the current operating performance of our hypothetical company more accurately. The continuous update attributable to TTM financial data facilitates the identification of patterns in a company’s operating performance, while “smoothing out” seasonal fluctuations. TTM stands for “Trailing Twelve Months” and is a backward-looking metric that portrays the financial performance of a company as of its most recent four reporting quarters. The Trailing Twelve Months (TTM) is a method to measure a company’s operating performance across the past four quarters, or last twelve months.

What is TTM in Stock?

Technically, we could compute TTM EBITDA as the sum of each quarter, but for illustrative purposes, we’ll use the more practical formula mentioned earlier. Upon inserting our assumptions into each corresponding formula, we arrive at $600 million, $264 million, and $ 148 million for TTM revenue, TTM EBIT, and TTM EBITDA, respectively. Mutual Fund, Mutual Fund-SIP are not Exchange traded products, and the Member is just acting as distributor. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. Before investing in securities, consider your investment objective, level of experience and risk appetite carefully.

Many investors like to see that a company’s revenue and profits are trending up for the past 12 months and/or costs or debt are decreasing. TTM data with different focuses allows investors to compare current performance with that of the previous 12 months. Among other things, this ensures that seasonal impacts are accounted for, no matter what 12-month stretch is being analyzed. The TTM price to earnings ratio (PE) is the result of dividing the current stock price by the trailing twelve-month earnings per share. The simplest way to calculate numbers from the trailing twelve months remains by adding the three-month periods that divide the fiscal year by the previous four quarters. Working capital gives us a great example of these calculations, which come from items on the balance sheet and are then averaged.

What is TTM growth?

A bad quarter might leave you questioning your judgment; a strong quarter can make you overconfident. When examining stocks, investors and analysts examine the TTM to determine the stock’s performance over the last twelve months. For businesses, TTM allows them to compare and contrast between different time periods. Helping businesses to gain a general picture of their performance with little impact from any unique changes or effects of seasonal fluctuations.

1. TTM charts are less useful for identifying short-term changes and more useful for forecasting.
2. As a side note about dividends, use the dividend yield calculator to check how much you are going to be paid depending on the amount of shares you have.
3. Ultimately, many view TTM as an incredibly powerful tool, and is an excellent indicator of a company’s potential as well as their performance.
4. Remember, there isn’t a single TTM ratio that’s universally “good.” Instead, these ratios should be examined against industry norms, past company performance, and projected growth trajectories.
5. The 12 months examined may not necessarily correspond to the conclusion of a fiscal year.
6. TTM P&L keeps a running tab of how well an investment or project has performed over the prior twelve-month period.

What does trailing twelve months Profit & Loss mean?

As a side note about dividends, use the dividend yield calculator to check how much you are going to be paid depending on the amount of shares you have. The bottom line is to use whatever pattern works best for you and stick with it; the configuration doesn’t matter as long as you are using numbers from the last twelve months. For example, the TTM may be a combination of the six months before the end of the fiscal period and the following six months past the beginning of the new fiscal period. For example, we are trying to value Apple, and they released the latest 10-k in November, but it’s October. We can go back to the last 10-k from 2023 or guess using the latest quarterly report.

If a business’ quarterly or annual numbers have seen a rapid change or otherwise out of date, TTM helps reduce the impact of any anomalies in any data. Financial institutions may find TTM results more reliable than year-to-date numbers or data from a previous annual report when a business applies for a loan. In addition, TTM can be used by a prospective buyer of a private business to see how sales have grown in the past 12 months. If the company trades excessively over the sector’s average, then we have a terrible EV to TTM EBITDA. But the leader of that industry, Fortinet, trades at 82.7 times EV to TTM EBITDA, making it a costly stock and, consequently, risky investment. Both provide up-to-date TTM numbers across all line items, which is extremely helpful in calculating TTM cash flows or net incomes.

The most recent year-to-date (YTD) period plus most recent full fiscal year less year-to-date period from prior year are used to compute TTM data. Rebecca Baldridge, CFA, is an investment professional and financial writer with over 20 years’ experience in the financial services industry. In addition to a decade in banking and brokerage in Moscow, she has worked for Franklin Templeton Asset Management, The Bank of New York, JPMorgan Asset Management and Merrill Lynch Asset Management. She is a founding partner in Quartet Communications, a financial communications and content creation firm. 11 Financial may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements.

Companies conducting internal corporate financial planning and analysis have access to detailed and very recent financial data. They use the TTM format to evaluate key performance indicators (KPI), revenue growth, margins, working capital management, and other metrics that may vary seasonally or show temporary volatility. The 12-month measure is typically reported on a company’s balance sheet, which is customarily updated every quarter to comply with generally accepted accounting principles (GAAP).