The Trade Desk (TTD) Is a Trending Stock: Facts to Know Before Betting on It

The Trade Desk (TTD) is trending on Zacks.com, but has returned -7.4% over the past month, underperforming the S&P 500. While the company's last quarter showed revenue growth of 25.4% and beat EPS estimates by 32%, analysts have decreased earnings estimates for the current and next fiscal year by -2.1% and -1% respectively. The stock currently has a Zacks Rank #4 (Sell), suggesting potential underperformance in the near term, and a Value Style Score of F, indicating it's trading at a premium.

Analysis

The Trade Desk (TTD) has recently demonstrated significant stock underperformance, declining 7.4% over the past month, in stark contrast to the Zacks S&P 500 composite's 6.9% gain and its peer group, the Zacks Internet - Services industry, which appreciated 15.8%. This underperformance occurs despite TTD's last reported quarter showing robust revenue of $616.02 million, a 25.4% year-over-year increase and a 7.27% surprise above consensus, alongside an EPS of $0.33, which beat estimates by 32%. Historically, TTD has consistently surpassed EPS estimates over the trailing four quarters. However, a cautious outlook is suggested by recent downward revisions to earnings estimates: the consensus for the current quarter ($0.42 per share, representing +7.7% YoY growth) has been lowered by 2.3% in the last 30 days. Similarly, estimates for the current fiscal year ($1.77 EPS, +6.6% YoY) and the next fiscal year ($2.17 EPS, +22.4% YoY) have seen reductions of 2.1% and 1.0%, respectively, over the same timeframe. While projected revenue growth remains healthy, with consensus estimates pointing to +17.1% YoY for the current quarter, +16.6% for the current fiscal year, and +19% for the next, these negative earnings estimate revisions are key drivers behind TTD's Zacks Rank #4 (Sell). Compounding these concerns, the company's valuation is high, as evidenced by a Zacks Value Style Score of F, indicating it trades at a premium.

Key Decisions for Investors

• Investors should weigh TTD's strong historical earnings beats and continued projected revenue growth against the recent negative revisions in forward earnings estimates and its current Zacks Rank #4 (Sell) designation.
• The stock's premium valuation, highlighted by a Zacks Value Style Score of F, warrants careful consideration, particularly given the potential for near-term underperformance suggested by the recent estimate revisions and sell rating.
• Close monitoring of subsequent earnings reports and any further shifts in analyst consensus estimates is advisable to reassess the investment thesis, especially before committing new capital or significantly altering existing positions.