What is EPS TTM?
What does the earnings per share on a trailing twelve months mean?
What’s important to know?
In this article, I will break down the meaning of EPS TTM so you know all there is to know about it!
Keep reading as we have gathered exactly the information that you need!
Let me explain to you what EPS TTM means once and for all!
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What Is EPS TTM
Investors, traders, and financial analysts look at various financial metrics to assess a company’s financial performance.
A company’s overall value really comes down to how much it generates in revenues and how much money is paid out to shareholders.
For this reason, many will closely monitor a company’s earnings metrics to assess its overall financial health.
The earnings per share or EPS is one key earnings metric that is widely used to assess a company’s profitability.
A company’s EPS (or earnings per share) is essentially the company’s total earnings divided by the total number of outstanding shares of stock it has issued.
For example, if a company has $100,000,000 earnings and 100,000,000 shares of stock issued, its earnings per share will be $1.00 per share ($100M / 100 shares).
A company’s earnings are reported on a quarterly basis and then on a yearly basis at the end of its fiscal year.
The higher the EPS, the more the company is profitable.
The lower the EPS, the less the company is profitable.
TTM is an acronym that stands for “Trailing Twelve Months”.
When you’re looking at a financial measure for the trailing twelve months, it means you’re looking at a 12-month reference period starting from this moment and for the preceding twelve months.
For example, a company can report is revenues on a TTM basis.
This means that when it issues its financial statements, it will provide its revenues for the period covered by the financial statement but it will also report the Trailing Twelve Months so the investors can get a sense of the revenues on an annualized basis.
TTM is quite useful for investors and analysts as it allows the normalization of cyclical variations or seasonal impacts on a company’s financial performance.
Understanding EPS TTM
EPS TTM essentially means “Earnings Per Share Trailing Twelve Months”.
EPS stands for Earnings Per Share and TTM stands for Trailing Twelve Months.
When the earnings per share are reported on a trailing twelve month basis, it means that you are looking at the company’s twelve-month earnings over the last consecutive twelve-month period.
For example, if you are looking at the EPS TTM in June, you will be potentially looking at the company’s revenues from June of last year until June of this year.
A TTM is not necessarily the company’s fiscal year.
In essence, the trailing twelve months covers the last 12 months as a reference period regardless of whether the last twelve months happen to be a company’s fiscal year or not.
How To Calculate EPS TTM
To calculate EPS TTM, you’ll need to find a company’s net profits, dividends paid, and number of shares outstanding.
To calculate the EPS TTM, you’ll need to use the following formula:
EPS TTM = (Net Income Last Twelve Months – Dividends Paid Last Twelve Months) / Outstanding Shares
To ensure that you get the earnings per share on a trailing twelve months basis, make sure that you use the net income for the last twelve months along with the dividends that were paid out in the last twelve months.
For example, a company can have the following figures:
- Net Income = $10,000,000
- Dividends Paid = $2,000,000
- Shares Outstanding = 50,000,000
EPS TTM = ($10M – $2M) / 10M = 0.80
EPS TTM Example
Let’s look at an example of EPS TTM to better understand the concept.
Imagine that Company ABC has reported its earnings per share figures for the past several quarters, as follows:
- Q1 Year 1: $10
- Q2 Year 1: $15
- Q3 Year 1: $20
- Q4 Year 1: $25
- Q1 Year 2: $12
- Q2 Year 2: $17
- Q3 Year 2: $22
- Q4 Year 2: $27
If you’re in Q1 of Year 3 and want to calculate the company’s EPS TTM, you’ll need to add up Q1 to Q4 of Year 2 ($12 + $17 + $22 + $27 = $78).
If you’re in Q2 of Year 2, to calculate the EPS TTM at that time, you’ll need to add Q2 Year 1 all the way to Q2 Year 2 ($15 + $20 + $25 +$12 = $72)
As you can see, the EPS TTM is essentially the Earnings Per Share figures over the course of the last twelve months.
So there you have it folks!
What does EPS TTM mean?
EPS is the abbreviation for “Earnings Per Share” representing a simple financial metric where a company’s earnings are presented on a per-share basis.
For example, if a company has earned $100,000,000 in revenues and has 50,000,000 shares outstanding, its earnings per share are $2.00 (or $2.00 of revenues for each share of stock outstanding).
TTM is the abbreviation for “Trailing Twelve Months” which is a popular reference period spanning the last 12 months.
So if you’re looking at a company’s Earnings Per Share over a Trailing Twelve Months period, it means that you are looking at how much a company has earned, on a per-share basis, in the last twelve months.
Now that you know what is the EPS (TTM), good luck with your research!
If you enjoyed this article on EPS TTM, I recommend you look into the following terms and concepts. Enjoy!
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