Investment Opportunity: Consider Purchasing TTD Shares at the Current Price of $55
The Trade Desk's Stock Offers an Attractive Entry Point Amidst Slight Setbacks
The Trade Desk (TTD), a leading digital advertising platform, has seen a recent decline in its stock price, providing an opportunity for investors. Despite this dip, the company's financial performance remains robust.
In the latest quarter, TTD reported revenues of $694 million, a 19% year-over-year increase. Over the past four quarters, the company's Operating Cash Flow (OCF) stood at a impressive $929 million. The Trade Desk's Operating Income for the same period was $475 million.
However, the stock's decline can be attributed to a slight miss on Q3 guidance and the departure of Laura Schenkein as the CFO. This has led to a current valuation that is closer to its historical averages. TTD's forward P/E ratio is about 65.9 and its price-to-sales (P/S) ratio is near 9.9–11.1x, below its five-year average P/S ratio of 21.3x but significantly higher than the broader S&P 500 averages (P/E ~24, P/S ~3) and the general ad-tech sector average P/E of 30–35.
Comparatively, a major competitor like AppLovin trades at a notably higher P/E ratio (TTD ~66 vs. AppLovin ~36) but a lower P/S ratio (TTD ~9.9–11.1x vs. AppLovin ~25x). AppLovin carries moderate debt with improving leverage ratios, while TTD has stronger profitability metrics, including a 34% non-GAAP EBITDA margin and a high ROIC of 35.45%.
Financially, TTD's net income for the last four quarters totalled $417 million, with a profit margin of 13%. The company's growth outlook remains robust, forecasting a 15% annual revenue growth over the next three years, well above the 3% expected for the broader media industry.
In summary, TTD remains a highly valued growth leader that is currently trading at a valuation discounted from its historical highs but still premium versus peers like AppLovin, reflecting its stronger profitability and operational metrics.
| Metric | The Trade Desk (TTD) | AppLovin | S&P 500 Average | |---------------------|------------------------------|-----------------------------|-----------------------------| | Forward P/E | ~65.9 | ~36 | ~24.96 | | Price-to-Sales (P/S) | ~9.9–11.1 | ~25 | ~3.0 | | EBITDA Margin (non-GAAP) | 34% | Lower, less consistent | N/A | | ROIC | 35.45% | Lower | ~11.9% | | Revenue Growth Forecast | 15% p.a. next 3 years | ~52% EBITDA CAGR | ~3% (media industry) | | Debt | Low / not significant | Moderate, improving leverage | Varies |
TTD's cash (including cash equivalents) constitutes $1.7 billion of the $6.0 billion in total assets. The company's Cash-to-Assets Ratio is 28.3%, and its Debt-to-Equity Ratio is 1.1%. Despite strong results, TTD's shares have underperformed compared to the S&P 500 index during several recent downturns.
The Trade Desk's average price-to-sales ratio over the last four years has been 24x. The stock drop follows a significant rally, with TTD shares climbing nearly 20% over the past thirty days. TTD stock has fully regained its pre-Crisis peak during the COVID-19 Pandemic (2020), but it plummeted 64.3% during the Inflation Shock (2022).
In conclusion, while TTD's stock may have experienced some setbacks, its financial performance and growth prospects remain strong, making it an attractive opportunity for investors seeking exposure to the digital advertising sector.
- The recent decline in The Trade Desk's (TTD) stock price, notwithstanding its dip, has triggered interest among investors, given its robust financial performance.
- Despite underperforming against the S&P 500 index during some recent downturns, The Trade Desk's (TTD) financial performance and growth prospects in the digital advertising sector make it an attractive opportunity for investors.
