The Trade Desk Inc (TTD, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at 78.43, The Trade Desk Inc has witnessed a daily gain of 2.66%, marked against a three-month change of 0.34%. A thorough analysis, underlined by the GF Score, suggests that The Trade Desk Inc is well-positioned for substantial growth in the near future.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Here are the key components of The Trade Desk Inc's GF Score:
- Financial strength rank: 7/10
- Profitability rank: 8/10
- Growth rank: 9/10
- GF Value rank: 9/10
- Momentum rank: 9/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With high ranks in growth, GF value, and momentum, and solid ranks in financial strength and profitability, GuruFocus assigned The Trade Desk Inc the GF Score of 93 out of 100, which signals the highest outperformance potential.
Company Overview: The Trade Desk Inc
The Trade Desk Inc, with a market cap of $38.45 billion, provides a self-service platform that helps advertisers and ad agencies programmatically find and purchase digital ad inventory on different devices. The firm generates its revenue from fees based on a percentage of what its clients spend on advertising. Since becoming a public company in 2016, it has increased revenue at a 43% average annual rate, with operating margins of 10%-28%. The company's sales stand at $1.73 billion, with an operating margin of 8.5%.
Financial Strength Analysis
According to the Financial Strength rating, The Trade Desk Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. With an Altman Z-Score of 11.26, The Trade Desk Inc exhibits a strong defense against financial distress, highlighting its robust financial stability. With a favorable Debt-to-Revenue ratio of 0.15, The Trade Desk Inc's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows The Trade Desk Inc's impressive standing among its peers in generating profit. Furthermore, The Trade Desk Inc's Gross Margin has seen a consistent rise over the past five years, as evidenced by the data: 2018: 76.09; 2019: 76.37; 2020: 78.61; 2021: 81.48; 2022: 82.18; . This trend underscores the company's growing proficiency in transforming revenue into profit.
Growth Rank Breakdown
Ranked highly in Growth, The Trade Desk Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 31.7%, which outperforms better than 85.61% of 2398 companies in the Software industry. Moreover, The Trade Desk Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 6.3, and the rate over the past five years is 13. This trend accentuates the company's continued capability to drive growth.
Conclusion
Given The Trade Desk Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. This analysis underscores the company's robust financial health, impressive profitability, and strong growth potential, making it a compelling investment opportunity. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
