New Feature Launched: Trailing Twelve Months Financials

 “WE HAVE JUST MADE THE NEXT SET OF FULL YEAR FINANCIALS MORE PREDICTABLE!”

In case you have not yet noticed, ShareInvestor now boasts of providing you with Trailing Twelve Months Financials. You can check out this feature for yourself by going to Financials and setting the Financials Filter to “Full Year”.

Trailing Twelve Months (“TTM”) Financials

What is it?

Trailing Twelve Months (“TTM”) Financials

Why is it useful?

1. More Current

TTM financials give a better indication of the financial performance of a company than the last Full Year results, which could have been released up to 9 months ago. The need of investors for the most up to date information is better met with TTM financials and financial ratios (e.g. P/E, EPS, ROE and growth rates, etc.) generated using TTM financial data.

2. Easily Compared

It is easier to compare performance between two 12-month periods than to compare between 3Q, 2Q and 1Q with the prior FY.

3. Seasonality Factors

The resulting quarterly swings are smoothened out with TTM analysis.

SingPost

SingPost had been a market outperformer which took off when it announced a strategic collaboration with Alibaba in May 2014.  In Dec 2015, the CEO abruptly resigned and it was also announced shortly thereafter that Special Auditors were appointed to investigate lapses in 2014 deal disclosure.  In Feb 2016, S&P downgraded SingPost’s credit rating from A to A- with a stable outlook amid increased earnings volatility.  SingPost share price at its recent low of $1.285 (28 January 2016) had taken a beating of about 40% from its all-time high of $2.151 (28 January 2015).

Assuming there are no integrity issues with the financial reports of SingPost, let us examine the TTM financials of SingPost as we look forward to its FY Mar 2016 results.

You will note that all the growth rates pertaining to TTM (based on Dec 2015) are much higher than the FY Mar 15 growth rates.  Revenue grew by 17.7%, Profit After Tax grew by 16.0% and Net Earnings grew by 17.1%.  Given this set of TTM financials, would it not be reasonable to expect the official FY Mar 16 results to show similar improvements?

STI component stocks whose financial year end does not end on 31 Dec

The results of the study based on the above methodology are summarized below:

Though not by design, this sample comprised defensive dividend yielding stocks.  From the TTM numbers, we can expect revenue growth to range from -2.7% (decline) to +11.7% increase.

Abnormally high profit growth rate numbers (SIA and GLP stand out) will require further investigations.   For example, in SIA case, it is due to exceptional items (“Remeasurment gain of $119.8 mil. arising from consolidation of Tiger Airways” and “Impairment on long-term investment” of -$63.6 mil.) 

Other than these two companies, net earnings growth are in single digit generally, with SATS standing out with 13.2% double digit growth.

As always, both our case studies do not represent complete nor comprehensive analyses and further investigations are recommended prior to making an investment.

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Disclaimer:

The mentioned stocks should not be taken as an advice to buy or sell. Each user should go through with his usual self-analysis of his risk appetite and perform additional due diligence before making any investment or trading decision. Your Trading Representative should be consulted before making any financial decision.