For example, let’s say a company’s stock price is $100 per share, and they paid $0.50 in dividends in each of the last four quarters. Many finance websites list TTM financials to show investors the most up-to-date numbers. For example, revenue and EPS may be displayed as “revenue (TTM)” and “EPS (TTM)” to show that the figures are for the past 12 months.

Conceptually, the trailing twelve months (TTM) is a measure of a company’s financial performance in the most recent 12-month period. TTM revenue (sales) and profitability metrics show how much money the company brought in and earned over the previous one-year period, regardless of which quarter’s financial statements are being released. Less frequently, firms provide monthly statements with sales volumes or key performance indicators. The cash flow statement calculation is the same as the income statement, where you need to add the last four quarters of financial results to get the trailing 12 months (TTM).

Role of TTM in Making Investment Choices

For instance, Intel stands out with notable Return on Invested Capital (ROIC), Return on Equity (ROE), and EPS ratios, and it trades at a mere 7 times its earnings. TTM figures offer invaluable insight when comparing companies in similar sectors or industries. You can determine which company is more prosperous by comparing financial factors like EPS.

Investors often perform hands-on calculations of various financial metrics, including trailing 12 months (TTM), in spreadsheets like Excel. One example is the price-to-earnings (P/E) ratio, which is calculated by dividing the stock price by the trailing earnings per share (EPS) in the last four quarters. Trailing twelve months (TTM) figures include the financial metrics for the last four quarters, which amounts to a full year of business performance.

However, the problem with these approaches is that they quickly become overwhelming when you look at many companies simultaneously. The differences between TTM and LTM aren’t about better or worse—both are excellent financial reports. TTM provides a more accurate picture on a quarterly basis, while LTM offers a fixed historical view on past key performance indicators. If you’re calculating TTM using data from a publicly traded company, you will need to use the latest financial statements, which are released quarterly. Investors and analysts often use TTM calculations when looking at a company’s P/E ratio, dividend yield, and earnings per share (EPS).

Each of these ratios measures different aspects of a company’s financial performance. Here, the TTM methodology shines by enabling investors to perform a comprehensive, side-by-side comparison of these financial ratios across companies, thus facilitating a more nuanced understanding of overall performance. For instance, when Company A has an EPS of $0.50, and Company B’s EPS stands at $0.75, the latter exhibits a 50% better performance price to earnings ratio, indicating a stronger position. But if you want to calculate the TTM for earnings per share (EPS), you will need to look at the income statement. It’s calculated by dividing the latest TTM numbers by the numbers in the preceding 12-month period.

1. 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.
2. Adam received his master’s in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology.
3. The cash flow statement calculation is the same as the income statement, where you need to add the last four quarters of financial results to get the trailing 12 months (TTM).
4. Trailing data or indicators can be used to guide decisions based on the relationship between current data and the underlying trend reflected in the trailing indicator.

TTM ratios used (regarding financial data)

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. In short, TTM revenue reflects historical data (”Actual”), while NTM revenue is derived from a pro-forma forecast (”Projected”). Always remember to conduct your own in-depth research before making any investment decisions. Consider other potential factors that could influence this perceived drop in value, ensuring a comprehensive understanding of the investment landscape. However, spotting an undervalued company, such as Intel in this case, doesn’t mean one should rush into investment. While straightforward, manually gathering and inputting the data into Excel can be time-consuming and prone to human error.

By keeping a running tab of TTM metrics, a firm’s management and stakeholders can understand how the company is doing at any point in time using an apples-to-apples comparison. In other words, by always looking at the previous 12 months, effects such as seasonality or one-time charges can be smoothed out. It’s crucial to use the most recent data, understand industry norms, and make like-for-like comparisons to ensure the accuracy of your financial analysis. For more information on how to achieve this, check out this ultimate guide to managing live and historical stock data. 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.

EPS & TTM (Earnings per Share & Trailing Twelve Months)

The one thing to be aware of is that the level of disclosure available in quarterly and interim reporting is sometimes not as good as in the annual report. Some websites do quote a few TTM ratios but never to the extent that we are making them available. TTM is often used to format financial data and formulate finance-related ratios.

Term to maturity calculation in Excel

It is calculated by dividing the net income of a company by its available shares. While previous fiscal year used for tax and accounting purposes, the TTM abbreviation refers to the prior 12 month period up through the most recently updated financial records. In contrast, NTM revenue is oriented around pro-forma financial performance obtained from a forecast model, providing insights into expected growth and performance. Given those data points from earlier, we’ll insert the reported revenue figures of Alphabet into the TTM formula.

Let’s consider an example where we compare the TTM ratios of five industry-similar companies. TTM ratios interpretation involves consideration of industry norms, as industries differ in their weighted average TTM ratios. As you can see, calculating TTM data for the income statement is very simple and straightforward. Yet, it’s important not ttm meaning in share market to base your analysis solely on a single piece of financial reporting. When evaluating multiple financial reportings like EPS, revenue growth, and net income, a more complete picture emerges. In contrast, LTM refers explicitly to the previous fiscal year of the company’s stock price.

Create a Free Account and Ask Any Financial Question

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. While the “best” TTM revenue ratios can depend on your investment strategy and the specific industry, some widely used TTM ratios include Price to Earnings (P/E), Debt to Equity (D/E), and Return on Invested Capital (ROIC). These can provide critical insights into a company’s profitability, financial stability, and investment efficiency. A profit and loss statement, sometimes referred to as an income statement, shows the revenue, costs, and expenses of a company for a specific period.

Investors often prefer TTM data since it is current but also seasonally adjusted. TTM data also makes it easy to compare the overall performance of one company to another. If you want to know how much a company has grown in the past year, you can divide the latest TTM numbers by the numbers in the preceding 12-month period.