Trailing Twelve Months (TTM)

TTM is a finance term that stands for trailing twelve months. It represents a company's financials in the last 12 consecutive months.

Trailing twelve-month figures include the financial metrics for the last four quarters, which amounts to a full year of business performance.

However, the time frame does not necessarily match the company's full fiscal year that it uses for accounting purposes.

Looking at trailing 12-month numbers is useful because these are the most current annualized numbers, and they reduce the effects of seasonality.

Using TTM figures, you can see a full year of up-to-date financials at any point in the year.

Note: Trailing means the same as past. It uses numbers from the past, as opposed to forward numbers which look at future estimates.

How to calculate TTM

Publicly traded companies report their financials every quarter based on generally accepted accounting principles (GAAP).

The simplest way to calculate a company's TTM financials is to add up the numbers from the last four quarterly reports.

For example, let's say that the latest report was for the third quarter (Q3). Then you can calculate the TTM numbers by adding them up from Q4 last year and Q1, Q2, and Q3 this year.

Formula: TTM = Q (latest) + Q (1 quarter ago) + Q (2 quarters ago) + Q (3 quarters ago)

If you were looking at Apple's (AAPL) financials in November of 2019 and wanted to calculate the TTM revenue, then you could have added up the revenues from Q4 2018 and Q1–Q3 2019:

  • Q4 2018: $84.3 billion
  • Q1 2019: $58 billion
  • Q2 2019: $53.8 billion
  • Q3 2019: $64 billion
  • TTM revenue: $84.3 + $58 + $53.8 + $64 = $260.1 billion

You can do this for most numbers on the income statement and cash flow statement. However, there is no use in calculating TTM figures for the balance sheet because they represent a single point in time instead of recurring numbers.

Alternative method

There is an alternative method to calculate TTM, but it is slightly more complicated than simply adding up the last four quarters.

If the latest quarterly report was for Q1, then you can add those numbers to the last full year's numbers from the annual report and subtract the previous year's Q1 numbers.

Formula: TTM figure = Most recent quarter(s) + Last full year - Corresponding quarter(s) last year

There is no point in calculating TTM numbers if the company just released an annual report. In that case, the full year's financials are the same as the TTM numbers.

Why annualized financial numbers are useful

Annualized TTM numbers are highly useful because they are more current than the last fiscal year's numbers and less volatile than quarterly numbers.

TTM numbers also help smooth out the effects of seasonality.

If you want to estimate a full year's financials, then it is a bad idea to multiply a single quarter's numbers by four.

For example, that would drastically misrepresent the numbers for a company that relies heavily on holiday sales. Instead, TTM numbers represent all seasons, including both weak and strong sales seasons.

TTM financials are also a great way to get a full year's worth of financial data without having to wait for the full fiscal year to end.

The last full fiscal year's number may already be outdated, especially late in the year. If you're well into Q3 or Q4, then the last full year's numbers are not current enough to make investing decisions.

On the other hand, TTM numbers are always current and up-to-date.

Financial metrics that use TTM

Many financial metrics use TTM numbers.

A great example is the popular price-to-earnings (PE) ratio. It is calculated by dividing the stock price by the trailing earnings per share (EPS) in the last four quarters.

Formula: PE Ratio = Stock Price / EPS (ttm)

Unless otherwise noted, the PE ratio uses the trailing twelve months EPS. You can sometimes see a forward PE ratio, which uses the estimated future EPS in the next four quarters or next fiscal year.

Other valuation ratios that use TTM numbers include the P/S ratio and the P/FCF ratio.

Many finance websites list TTM financials to show investors the most up-to-date numbers. For example, revenue and EPS may be displayed as "Revenue (ttm)" and "EPS (ttm)" to show that the figures are for the trailing (past) 12 months.

What TTM yield means

When you see TTM in relation to yield, it implies that the numbers use information from the last 12 months.

A TTM dividend yield is calculated by adding up the dividend from the last four quarters, then dividing by the current stock price.

For example, let's say a company's stock price is $100 per share, and they paid $0.50 in dividends in each of the last four quarters.

Then the TTM dividend yield is: ($0.50 + $0.50 + $0.50 + $0.50) / $100 = 2%

A forward dividend yield estimates what the dividend will be in the next four quarters, or simply multiplies the most recently announced quarterly dividend payment by four.

TTM growth

It is possible to use TTM numbers to calculate annualized changes in financial performance.

If you want to know how much a company has grown in the past year, then you can divide the latest TTM numbers by the numbers in the preceding 12-month period.

For example, if the trailing twelve months were Q4 of 2018 and Q1–Q3 of 2019, then you can divide that TTM number by Q4 of 2017 and Q1–Q3 of 2018 to see the annualized growth or decline.

These growth/decline numbers will be more up-to-date than the last full fiscal year's comparison, but much less volatile than the growth/decline numbers for a single quarter.