Do Not Call
Understand the meaning of TTM, how it’s calculated, and why it’s a vital tool for analysing stock performance and valuation.
Investors often rely on financial ratios and performance metrics to evaluate companies before investing. One such commonly used term is TTM, or Trailing Twelve Months. TTM offers a real-time view of a company’s most recent financial performance by accounting for data from the past 12 months—making it more current than annual or quarterly results.
TTM stands for Trailing Twelve Months. It represents a company’s financial data—such as revenue, net profit, or earnings per share (EPS)—over the most recent 12-month period, regardless of the fiscal year-end.
Instead of using outdated annual reports or limited quarterly snapshots, TTM provides the most relevant and updated perspective.
TTM is widely used for several reasons:
More current insights: TTM data reflects the latest performance, making it more relevant than year-old annual figures.
Helps with valuation: Key ratios like P/E (Price-to-Earnings) or EV/EBITDA are often calculated using TTM data.
Improves comparison: TTM levels the playing field when comparing companies with different financial year-end dates.
To calculate TTM, investors generally sum the most recent four quarters of a company’s financial data. Here’s an example using net income:
TTM Net Income = Q1 + Q2 + Q3 + Q4
If a company reported the following net income:
Q1: ₹500 Crores
Q2: ₹520 Crores
Q3: ₹490 Crores
Q4: ₹530 Crores
Then the TTM Net Income = ₹2,040 Crores.
TTM figures are commonly used in:
Gives a real-time view of earnings attributed to each share over the last 12 months.
P/E = Current Share Price / TTM EPS
This ratio is widely used to determine if a stock is undervalued or overvalued.
Shows the total income generated from operations in the last 12 months—useful for growth analysis.
Refer the below table:-
Aspect |
TTM |
Annual Report |
Quarterly Results |
|---|---|---|---|
Time Frame |
Last 12 months (rolling) |
Fixed 12-month period |
3-month period |
Relevance |
High |
Moderate |
Limited |
Update Frequency |
Every quarter |
Once a year |
Every quarter |
TTM strikes a balance between depth and recency, offering a holistic view that’s regularly updated.
While TTM is useful, it’s not flawless:
No seasonality insights: TTM may mask seasonal trends within quarters.
Ignores recent disruptions: A strong past quarter can skew TTM if more recent performance is declining.
Data adjustments needed: Investors must ensure consistency in accounting methods when comparing TTM figures across companies.
TTM is a powerful tool for investors seeking updated insights into a company’s financial health. It enhances valuation accuracy, supports trend analysis, and aids comparison across peers. However, like all metrics, it should be used alongside other indicators and qualitative analysis for a complete investment view.
This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.
TTM stands for Trailing Twelve Months. It refers to a method of evaluating a company’s performance over the latest 12 consecutive months, rather than sticking to a fixed fiscal year. This rolling measurement is particularly valuable because it captures the most recent business activity, smoothing out seasonal effects and quarterly anomalies.
Annual reports only reflect performance up to the last fiscal year-end, which may be several months outdated. TTM, on the other hand, combines the most recent four quarters of financial data, offering a timely and realistic view of a company’s current performance. This makes it more relevant for making up-to-date investment assessments.
Absolutely. When comparing companies with different fiscal year-ends, TTM helps level the playing field. By evaluating all firms over a consistent 12-month period, it becomes easier to draw fair comparisons in terms of revenue growth, margins, and profitability trends.
TTM data is frequently used to calculate important metrics like Earnings Per Share (EPS), Revenue, Profit Margin, and the Price-to-Earnings (P/E) Ratio. These figures help investors determine whether a stock is under or overvalued, based on recent performance rather than outdated results. TTM is also useful for tracking how performance changes over time in response to business cycles or market conditions.
.webp "Download"){kind=icon}
