TTM (Trailing Twelve Months)

What is TTM?

The shortened form TTM is measurement of data collected over previous 12-month period. Generally speaking, TTM period is twelve months that have passed since company's most recent earnings report or other financial disclosure, or twelve months that have preceded current month.

Consider TTM data as 12-month yardstick that financial analysts & businesses use to assess recent performance; this is not to be confused with YTD (year-to-date) or company's fiscal year.

TTM is extremely versatile tool that may be used with revenue, cash flow charts, profit-and-loss statements, & balance sheet numbers. Just keep in mind that each financial statement's 12-month period of reference varies from one to next.
 

What is TTM in Share Market?

Trailing 12-month returns are frequently more informative to examine than calendar years," stated Ted Haley, CFP, president & chief executive officer of Advanced Wealth Management located in Portland, Oregon. However, as is case with all things financial, figures can be deceiving. For instance, examining returns 12 months following crisis's lowest point will reveal that everything is in excellent shape, but it may not provide complete picture.

TTM Meaning in Terms of Stock Investing

The company's success as seen over longer period of time is frequently more significant than abrupt changes in single report. Assume that despite stellar quarter, company's stock price stays flat. That could occur because, despite having strong quarter, company's TTM numbers are still negative. If investors are aware of company's positive TTM data, they will be more inclined to purchase shares. company is caught in "show-me" cycle, where investors & analysts are more interested in long-term patterns that are improving than in specifics of any given quarter.

What is TTM in Finance?

TTM, or Trailing Twelve Months, is financial metric that represents company's performance over past 12 consecutive months. It is used to provide more current & seasonally adjusted view of financial data compared to annual reports.

TTM figures are commonly used for various metrics, including earnings, revenue, & financial ratios like price-to-earnings (P/E) ratio. By analysing TTM data, investors & analysts can gain insights into company's recent performance trends & make more informed decisions.

Example of TTM

An example of TTM (Trailing Twelve Months) can be seen in company’s revenue analysis. Suppose company reports quarterly earnings. To calculate TTM revenue, you would sum revenue from last four quarters. For instance, if company earned ₹5 million, ₹6 million,  ₹7 million, & ₹8 million in last four quarters, TTM revenue would be ₹26 million. This method helps investors understand company’s recent performance trends without waiting for annual report.

TTM & Financial Reporting

Since TTM format includes most recent financial data available, it is essential tool for businesses doing financial planning. TTM is particularly helpful for assessing variables that can change throughout year due to seasonal reasons, such as working capital, revenue growth, & profit margins.

TTM measures provide managers quick overview of financial health of their organization. By regularly analyzing preceding 12 months, components like seasonality, transient volatility, or one-time charges are averaged out, providing more accurate representation of company's financial situation at any particular point in time.
 

TTM & Equity Research

Quarterly financial reports are made available by publicly traded corporations through securities filings. financial statements are included in section of these files that is updated quarterly in accordance with generally accepted accounting principles (GAAP). This section includes trailing 12-month data.

The performance of company during last 12 months is best indicator of its future prospects. TTM has proven to be reliable predictor of future performance throughout time, according to Lexington Avenue Capital Management principal Larry Luxenberg, CFA, of New York.

TTM is helpful unambiguous standard since, although Securities & Exchange Commission (SEC) filings give quarterly or YTD financials, companies may provide monthly statements outlining sales volumes or performance indicators.
 

How to Calculate Trailing Twelve Months?

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. It's crucial to use entire year rather than just most recent quarter.

Here's illustration. It is 2021's second quarter. Assume following: ManufactCorp, corporation whose operations you are examining, recently announced ₹10 billion in YTD revenues; by comparison, their revenues for prior year were ₹33 billion, & their YTD figure was ₹6 billion. Subtract 6 from 10 & 33 to arrive at TTM revenue of ₹37 billion.
 

Why is TTM in stock important?

So why is TTM important to us? It can help us gauge company's performance over extended period of time. When business has positive TTM earnings, for example, it means that its operational expenses are less than its after-tax income, which translates into net profit over course of accounting year. corporation is spending more money than it is bringing in if its TTM numbers are negative. By using TTM values rather than single quarter, seasonal influences are mitigated & unique, one-time things are given less weight.

A company's success as seen over longer period of time is frequently more significant than abrupt changes in single report. Assume that despite stellar quarter, company's stock price stays flat. That could occur because, despite having strong quarter, company's TTM numbers are still negative. If investors are aware of company's positive TTM data, they will be more inclined to purchase shares. company is caught in "show-me" cycle, where investors & analysts are more interested in long-term patterns that are improving than in specifics of any given quarter.
 

Examples of TTM Measures

A variety of financial data types can be processed using TTM. Let's examine application of TTM to P/E, revenue, & yield ratios.

a. TTM revenue

The total revenue generated by business during previous 12 months. This could be net sales for manufacturing or retail company, but it would be interest income & other fees for bank. In comparison to company's most recent annual or quarterly sales report, which may already be months old, TTM revenue figure gives more realistic image of current performance.

b. TTM yield

The percentage of income that mutual fund or exchange-traded fund (ETF) has given investors back over course of preceding year is shown by TTM yield. To get fund's TTM yield, one must compute weighted average of yields found in its asset portfolio.

c. TTM price/earnings ratio

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). Investors can gauge stock's affordability or exorbitance in relation to its profits potential by examining trailing price to earnings ratio.
 

Conclusion

TTM is widely used measure not only because it provides suitable time span but also because it is necessary condition. In finance industry, full year is normal window of analysis. However, corporations do not reveal results for three of four periods in year; instead, we only see numbers for 12-month period when they file 10-K report with SEC.

Trailing twelve months meaning (TTM) refers to financial data for company over last 12 consecutive months. TTM meaning in share market is often used to evaluate company's performance, offering up-to-date view of its financial health. Understanding what is TTM in stock helps investors analyze trends, profitability, & earnings, providing comprehensive picture over year-long period.