Markets

The Trade Desk (TTD) Dips More Than Broader Markets: What You Should Know

In the latest trading session, The Trade Desk (TTD) closed at $608.32, marking a -1.87% move from the previous day. This change lagged the S&P 500's 1.86% loss on the day. Meanwhile, the Dow lost 2.3%, and the Nasdaq, a tech-heavy index, lost 1.64%.

Heading into today, shares of the digital-advertising platform operator had gained 36.79% over the past month, outpacing the Computer and Technology sector's gain of 9.23% and the S&P 500's gain of 7.63% in that time.

Investors will be hoping for strength from TTD as it approaches its next earnings release, which is expected to be November 5, 2020. On that day, TTD is projected to report earnings of $0.48 per share, which would represent a year-over-year decline of 36%. Our most recent consensus estimate is calling for quarterly revenue of $180.55 million, up 9.96% from the year-ago period.

TTD's full-year Zacks Consensus Estimates are calling for earnings of $3.17 per share and revenue of $732.40 million. These results would represent year-over-year changes of -14.09% and +10.79%, respectively.

It is also important to note the recent changes to analyst estimates for TTD. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. TTD is currently sporting a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that TTD has a Forward P/E ratio of 195.66 right now. Its industry sports an average Forward P/E of 38.64, so we one might conclude that TTD is trading at a premium comparatively.

Meanwhile, TTD's PEG ratio is currently 7.83. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Internet - Services was holding an average PEG ratio of 2.25 at yesterday's closing price.

The Internet - Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 206, which puts it in the bottom 19% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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