What Is Trailing 12 Months (TTM)
Trailing 12 months (TTM) is a term used to describe the past 12 consecutive months of a company’s performance data, that’s used for reporting financial figures. The 12 months studied do not necessarily coincide with a fiscal-year ending period.
The Basics of TTM
Analysts use TTM to dissect a wide swath of financial data, such as balance sheet figures, income statements, and cash flows. The methodology for calculating TTM data may differ from one financial statement to the next.
In the equity research space, some analysts report earnings quarterly, while others do so annually. But investors who seek daily information about stock prices and other current data may look to TTMs as more relevant measures, because they're more current, and they are seasonally adjusted.
TTM figures can also be used to calculate financial ratios. The price/earnings ratio is often referred to as P/E (TTM) and is calculated as the stock's current price, divided by a company's trailing 12-month earnings per share (EPS).
Much of fundamental analysis involves comparing a measurement against a like measurement from a prior term, to decipher how much growth was realized. For example, although the company that reports $1 billion in revenues is undoubtedly impressive, this achievement is even more notable if that same company's revenues increased from $500 million to $1 billion, within the last 12 months. This marked improvement provides a clear snapshot of the company’s growth trajectory.
Where to Find the TTM
The 12-month measure is typically reported on a company’s balance sheet, which is customarily updated on a quarterly basis, in order to comply with generally accepted accounting principles (GAAP), although some analysts take an average of the first quarter and the last quarter.
Line items on the cash flow statement (e.g., working capital, capital expenditures, and dividend payments) should be treated based on the feeding financial statement. For example, working capital is compiled of balance sheet line items, which are averaged. However, depreciation is deducted from income on a quarterly basis; so analysts look at the last four quarters as reported on the income statement.
Trailing 12 Months
- Trailing 12 months (TTM) is the term for the data from the past 12 consecutive months used for reporting financial figures.
- A company's trailing 12 months represent its financial performance for a 12-month period; it does not typically represent a fiscal-year ending period.
- The last 12 consecutive months provides investors with a compromise that is both current and seasonally adjusted.
TTM Revenue describes the revenue that a company earns over the trailing 12 months (TTM) of business. This data is instrumental in determining whether or not a company has experienced meaningful top-line growth, and can pinpoint precisely where that growth is coming from. However, this figure is often overshadowed by a company’s profitability, and its capability for generating earnings before interest, tax, depreciation, and amortization (EBITDA).
Used to analyze mutual fund or exchange-traded fund (ETF) performance, TTM yield refers to the percentage of income a portfolio has returned to investors over the last 12 months. This number is calculated by taking the weighted average of the yields of all holdings housed within a fund, whether they be stock, bonds, or other funds.