TTM

In detail

TTM means trailing twelve months: the four most recently reported quarters added together. It is used because a fiscal year is a stale snapshot for most of its life — by the third quarter, last year's annual figure describes a company that has since changed — while TTM always covers the last full year of actual results. It is the default basis for valuation ratios. P/E (TTM) uses the last twelve months of earnings, as against forward P/E, which uses analyst estimates for the next twelve and is therefore a forecast rather than a fact. Two limits are worth holding in mind. TTM is backward-looking: for a company whose situation has changed sharply — an acquisition, a divestiture, a collapse in demand — it averages in quarters that no longer describe the business. And because it sums four quarters, a single unusual quarter stays in the figure for a full year before rolling out, which can make a valuation look cheap or expensive long after the cause has passed.