What does the past 12 months (TTM) mean? – Councilor Forbes

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The Past 12 Months (TTM) is a way to review the performance of a public company or security over the past 12 months. A TTM reading of a company’s price / earnings ratio, earnings, or revenue, for example, offers investors and analysts a convenient way to analyze data that is unrelated to calendar year or year. exercise of a business.

Financial media typically feature TTM figures to show investors the most up-to-date figures on companies and stocks. Income and earnings per share (EPS) can be displayed as TTM to indicate that they are measuring the numbers for the past 12 months.

What does TTM mean?

The abbreviation TTM is a measure of data over a period of 12 months in the past. Typically, a TTM period refers to the 12 months leading up to the current month, or a 12 month period until the last report on company results or other financial information.

Think of TTM data as a 12-month rule that businesses and financial analysts use to measure recent performance, separate from a company’s fiscal year, current calendar year, or a measure since the start of. year (YTD).

TTM is a very flexible tool that can be applied to balance sheet figures, income statements, income and cash flow charts. Remember that the 12 month period to which the given TTM data refers differs from one financial statement to another.

“When looking at performance, the past 12 months are often more informative than just looking at calendar years,” said Ted Haley, CFP, president and CEO of Advanced Wealth Management in Portland, Oregon. “But as with anything to do with finance, the numbers can be misleading. For example, looking at returns 12 months after the low point of a crisis means everything will look fantastic, but it won’t necessarily tell the whole story.

Equity research analysts spend a lot of time studying quarterly and annual earnings reports, which, unlike TTM metrics, are tied to the quarter or calendar year. TTM, on the other hand, provides immediate and up-to-date current information on performance that is seasonally adjusted.

Three examples of TTM measurements

TTM can be applied to a wide variety of financial data. Let’s take a look at how the TTM is applied to revenue, yield, and P / E ratios.

  • TTM income. Total turnover of a company in the last 12 months. For a bank this would be interest income and other fees, while for a manufacturing or retail business it could be net sales. A TTM revenue measure provides a more accurate picture of recent performance than the company’s last annual or quarterly revenue report, which may already be several months old.
  • Yield TTM. For a mutual fund or exchange-traded fund (ETF), the TTM return is a measure of the percentage of income the security has returned to investors in the past 12 months. For a fund, the TTM return is calculated by taking the weighted average of the returns that make up its portfolio of assets.
  • Price / earnings ratio TTM. Also commonly known as P / E follower, it measures a company’s P / E ratio over the past 12 months. It is calculated by dividing the current stock price by the earnings per share (EPS) of the last four quarters. By looking at the trailing P / E, investors can get a sense of how cheap or cheap a stock is relative to its earning potential.

TTM and corporate financial reports

The TTM format is a key tool for companies doing financial planning because it incorporates the most recent financial data available. The TTM is particularly useful for evaluating things like working capital, revenue growth, and profit margins, which can fluctuate throughout the year based on seasonal factors.

For managers, TTM metrics provide an immediate view of a company’s financial health. The constant review of the past 12 months averages ingredients such as seasonality, temporary volatility, or one-off charges, providing a more representative picture of a company’s financial condition at any given time.

TTM Search and Actions

Public enterprises publish financial reports on a quarterly basis in the form of securities deposits. The part of these documents containing the financial statements presents measures over 12 months, updated quarterly in accordance with GAAP or generally accepted accounting principles.

“There is no better indicator of a company’s prospects than how well it has performed over the past 12 months. TTM has stood the test of time as a powerful indicator of performance and potential, ”said Larry Luxenberg, CFA, director of New York-based Lexington Avenue Capital Management.

The TTM is useful as a clear standard, as companies sometimes provide monthly statements detailing sales volumes or performance indicators, while documents filed with the Securities and Exchange Commission (SEC) present quarterly financial statements or annual.

How to calculate TTM digits

TTM figures are calculated using the most recent cumulative period (YTD) plus the last complete fiscal year minus the cumulative period of the previous year. It is important to use year-to-date, not just the last quarter.

Here is an example. We are in the second quarter of 2021. Let’s say that ManufactCorp, a company whose activity you are analyzing, just reported revenues of $ 10 billion year-to-date, while their revenues for the previous year were $ 33 billion. and that last year’s figure was $ 6 billion. You add 10 and 33 and subtract 6, to get $ 37 billion in TTM revenue.

The result on TTM

TTM is a popular metric not only because it covers a useful period, but because it is simply a prerequisite. The standard window of analysis in finance is a full year period, but for three out of four periods each year, companies do not publish results for the entire year; It’s only when they file a 10-K report with the SEC that we see numbers for a 12 month period.

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