Key Takeaways
- Measures financials over most recent 12 months.
- Updates dynamically with each new quarterly report.
- Used for valuation, comparisons, and trend analysis.
What is Trailing 12 Months (TTM)?
Trailing 12 Months (TTM) measures a company's financial performance over the most recent 12 consecutive months by aggregating data from the past four quarters. This rolling metric offers a timely and seasonally adjusted view that updates with each new report, providing a more dynamic snapshot than fixed annual or quarterly figures. Investors often rely on TTM to analyze earnings and other key metrics for more accurate valuation.
Key Characteristics
TTM has several defining features that make it valuable for financial analysis:
- Rolling period: Always covers the latest 12 months, updating after each quarter for current insights.
- Seasonally adjusted: Helps smooth out fluctuations in performance, similar to data smoothing techniques.
- Comparable across companies: Useful for firms with different fiscal year-ends or seasonal businesses.
- Flexible metrics: Applies to revenue, operating income, cash flow, and other financial data.
- Widely used for valuation: Supports calculating multiples like P/E and PEG ratios, enhancing investment decisions.
How It Works
To calculate TTM for a financial metric, you sum the latest full fiscal year data and the current year-to-date (YTD) data, then subtract the prior year’s YTD for the same period. This ensures the total reflects exactly 12 months without overlap or gaps. For example, if you have the annual report and the latest quarterly report, you combine them and adjust for the overlapping months.
This rolling approach allows you to capture recent trends and avoid distortions from seasonality or one-time events. Investors analyzing JPM or BAC often use TTM figures to assess profitability and risk with the most current data available.
Examples and Use Cases
TTM is valuable for various industries and financial analyses, including:
- Banking: JPM and Bank of America use TTM to track recent earnings and operating income trends for performance assessment.
- Valuation: Investors calculate the PEG ratio using TTM earnings to better gauge growth relative to price.
- Performance tracking: Businesses monitor TTM CAGR for revenue and profit growth to inform strategic planning.
Important Considerations
While TTM provides a more current snapshot than annual reports, it depends on timely and accurate quarterly filings, which may lag or be unavailable for some companies. The metric can still be influenced by one-off gains or losses if not adjusted properly.
When using TTM, it’s important to compare it alongside other metrics and understand the context behind the numbers. Especially in volatile industries or during unusual market conditions, combining TTM with longer-term trends can provide a fuller picture of financial health.
Final Words
Trailing 12 Months (TTM) offers a timely snapshot of financial performance by smoothing seasonal and quarterly fluctuations. Use TTM metrics to compare companies or update your valuations regularly for the most current insights.
Frequently Asked Questions
Trailing 12 Months (TTM) measures a company's financial performance over the most recent 12 consecutive months using data from the past four quarters. It provides a rolling, seasonally adjusted view that updates with each new quarterly report, offering a more current snapshot than static annual or quarterly figures.
Unlike Year-to-Date (YTD), which covers the period from the fiscal year start to the current date and can be less than 12 months, TTM always spans exactly 12 months. TTM offers a rolling view that updates as new data becomes available, whereas YTD resets each fiscal year.
TTM is valuable because it reflects the most recent financial performance without waiting for fiscal year-end reports. This makes it useful for valuation, peer comparisons, trend analysis, and monitoring key performance indicators, helping investors and analysts make timely and informed decisions.
You calculate TTM by adding the latest full fiscal year data to the current year-to-date (YTD) figures, then subtracting the prior year's YTD data for the same period. This formula ensures you capture exactly the last 12 months of performance.
Yes, TTM can be applied to various financial metrics like revenue, EBITDA, earnings per share, or cash flow. It provides a consistent, rolling 12-month perspective that helps in evaluating recent performance across different metrics.
TTM smooths out seasonal fluctuations and allows for direct comparisons between companies with different fiscal year-ends. Because it uses the most recent 12 months of data, it provides a standardized and up-to-date view regardless of varying reporting periods.
Sure! If a company’s full-year revenue for 2024 is $1,200 million, Q1 2025 revenue is $350 million, and Q1 2024 revenue was $300 million, the TTM revenue would be $1,200M + $350M – $300M = $1,250 million. This represents revenue from April 1, 2024, to March 31, 2025.
