Validea Detailed Fundamental Analysis

Validea's guru fundamental report indicates that TRADE DESK INC (TTD) rates highest using their P/B Growth Investor model, based on Partha Mohanram's strategy, with a rating of 66%. The model, which favors low book-to-market stocks with sustained growth characteristics, positively assesses TTD's book/market ratio, return on assets, cash flow, and sales variance, but finds deficiencies in advertising, capital expenditures, and R&D relative to assets. Mohanram's research identifies criteria to distinguish successful growth stocks from those that falter, contrasting with academic findings on growth investing.

Analysis

TRADE DESK INC (TTD), a large-cap growth stock within the Software & Programming industry, registers a 66% rating according to Validea's P/B Growth Investor model, which is based on Partha Mohanram's strategy targeting low book-to-market stocks with indicators of sustained future growth. This score, while reflecting some positive attributes, is below the 80% threshold that typically indicates significant model interest. TTD successfully passes several key criteria of this model, including its book/market ratio, return on assets, cash flow from operations to assets, the consistency between cash flow from operations and return on assets, return on assets variance, and sales variance. Conversely, the company fails the model's tests concerning its advertising to assets, capital expenditures to assets, and research and development to assets ratios. Mohanram's academic-derived model aims to identify growth stocks with a higher probability of sustained outperformance by scrutinizing specific financial statement characteristics, offering a nuanced perspective on growth investing.

Key Decisions for Investors

• Investors should interpret TTD's 66% score on the P/B Growth Investor model as an indication of several positive fundamental growth traits, while also noting that it does not meet the 80% threshold signalling strong conviction from this specific strategy.
• The identified weaknesses in TTD's ratios for advertising to assets, capital expenditures to assets, and research and development to assets warrant further investigation, as these components could potentially impact the sustainability of its long-term growth trajectory despite current strengths in profitability and sales performance.
• For investors who heavily weigh Partha Mohanram's growth methodology, the current assessment suggests a need for careful consideration or additional corroborating evidence before increasing exposure, given the mixed results from the model's criteria.