Validea Detailed Fundamental Analysis

Validea's guru fundamental report assigned The Trade Desk (TTD), a large-cap software growth stock, a 77% rating using the Partha Mohanram P/B Growth Investor model, which identifies low book-to-market stocks with sustained growth potential. This score places TTD just below the 80% threshold for indicating 'some interest' by the strategy. While TTD passed most fundamental criteria, such as return on assets and cash flow from operations, it notably failed tests for advertising to assets and research and development to assets.

Analysis

Below is Validea's guru fundamental report for TRADE DESK INC (TTD). Of the 22 guru strategies we follow, TTD rates highest using our P/B Growth Investor model based on the published strategy of Partha Mohanram. This growth model looks for low book-to-market stocks that exhibit characteristics associated with sustained future growth. TRADE DESK INC (TTD) is a large-cap growth stock in the Software & Programming industry. The rating using this strategy is 77% based on the firm’s underlying fundamentals and the stock’s valuation. A score of 80% or above typically indicates that the strategy has some interest in the stock and a score above 90% typically indicates strong interest. The following table summarizes whether the stock meets each of this strategy's tests. Not all criteria in the below table receive equal weighting or are independent, but the table provides a brief overview of the strong and weak points of the security in the context of the strategy's criteria. | BOOK/MARKET RATIO: | PASS | | RETURN ON ASSETS: | PASS | | CASH FLOW FROM OPERATIONS TO ASSETS: | PASS | | CASH FLOW FROM OPERATIONS TO ASSETS VS. RETURN ON ASSETS: | PASS | | RETURN ON ASSETS VARIANCE: | PASS | | SALES VARIANCE: | PASS | | ADVERTISING TO ASSETS: | FAIL | | CAPITAL EXPENDITURES TO ASSETS: | PASS | | RESEARCH AND DEVELOPMENT TO ASSETS: | FAIL | Detailed Analysis of TRADE DESK INC More Information on Partha Mohanram About Partha Mohanram: Sometimes the best investing strategies don't come from the world of investing. Sometimes research that changes the investing world can come from the halls of academia. Partha Mohanram is a great example of this. While academic research has shown that value investing works over time, it has found the opposite for growth investing. Mohanram turned that research on its head by developing a growth model that produced significant market outperformance. His research paper "Separating Winners from Losers among Low Book-to-Market Stocks using Financial Statement Analysis" looked at the criteria that can be used to separate growth stocks that continue their upward trajectory from those that don't. Mohanram is currently the John H. Watson Chair in Value Investing at the University of Toronto and was previously an Associate Professor at the Columbia Business School. Additional Research Links Excess Returns Investing Podcast About Validea: Validea is aninvestment researchservice that follows the published strategies of investment legends. Validea offers both stock analysis and model portfolios based on gurus who have outperformed the market over the long-term, including Warren Buffett, Benjamin Graham, Peter Lynch and Martin Zweig. For more information about Validea, click here The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. The Trade Desk (TTD), a large-cap software growth stock, received a 77% rating from Validea's P/B Growth Investor model, which is based on the academic strategy of Partha Mohanram. This score positions the stock just below the 80% threshold that indicates 'some interest' from the model, suggesting a moderately positive but not strongly compelling quantitative signal. The model, designed to identify low book-to-market stocks with sustained growth potential, confirmed TTD's strengths in several key fundamental areas, including Return on Assets (ROA), Cash Flow from Operations to Assets, and low variance in both ROA and sales. However, the analysis also flagged notable weaknesses, as TTD failed the model's tests for its ratios of Advertising to Assets and Research and Development to Assets. For a technology company reliant on innovation and market expansion, these failures could imply that its spending on key growth drivers does not meet the model's specific criteria for efficiency or scale relative to its asset base, creating a nuanced outlook that contrasts strong current financial performance with potential questions about the efficiency of its future growth investments.

Key Decisions for Investors

• Investors should consider the 77% model score as a signal for cautious monitoring, as it reflects solid current fundamentals but falls short of a strong conviction 'buy' signal from this specific growth-oriented strategy.
• It is critical to conduct further due diligence on the company's spending efficiency in advertising and R&D, as the model's 'fail' ratings in these areas may be a leading indicator of challenges in sustaining long-term growth.
• This quantitative analysis should be used as a single input; investors should complement these findings with qualitative assessments of TTD's competitive moat, management strategy, and total addressable market to form a complete investment thesis.