The Trade Desk Inc (TTD, Financial) has experienced a notable uptick in its stock performance over recent periods. With a current market capitalization of $44.99 billion, the company's stock price stands at $91.77, reflecting a 7.92% gain over the past week and an 11.29% gain over the past three months. This growth trajectory has been underpinned by the company's fair valuation according to the GF Value, which is currently set at $100.35. This is a slight decrease from the past GF Value of $111.95, indicating that the stock was previously considered significantly undervalued. The current GF Valuation suggests that The Trade Desk is now fairly valued, aligning more closely with its intrinsic value.
Introduction to The Trade Desk Inc
The Trade Desk Inc operates within the dynamic software industry, providing a self-service platform that revolutionizes how advertisers and ad agencies purchase digital ad inventory across various formats and devices. Since its IPO in 2016, The Trade Desk has consistently grown its revenue at an impressive average annual rate of 43%, maintaining profitability with operating margins ranging from 10% to 28%. This performance underscores the company's robust revenue model and its strategic positioning in the digital advertising space.
Assessing Profitability
The Trade Desk's financial health is further evidenced by its strong Profitability Rank of 8 out of 10. The company's operating margin stands at 8.53%, which is better than 67.38% of 2,750 companies in the same industry. Additionally, The Trade Desk boasts a return on equity (ROE) of 7.49%, a return on assets (ROA) of 3.61%, and a return on invested capital (ROIC) of 11.96%, each outperforming a majority of its peers. These figures not only reflect the company's efficiency in generating profits but also its ability to reinvest earnings effectively. The Trade Desk has maintained profitability for 9 out of the past 10 years, a testament to its consistent performance.
Growth Trajectory
When it comes to growth, The Trade Desk does not disappoint, with a perfect Growth Rank of 10 out of 10. The company's 3-year revenue growth rate per share is an impressive 31.70%, and its 5-year rate is even higher at 34.00%. These figures are significantly better than the majority of their industry counterparts. Looking ahead, the estimated total revenue growth rate for the next 3 to 5 years is a robust 24.29%. However, it's worth noting that the 3-year EPS without NRI growth rate has seen a decline of 22.40%, but the future 3 to 5-year EPS growth rate estimate is expected to rebound to 24.00%, indicating potential for recovery and sustained growth.
Notable Shareholders
Among the significant shareholders of The Trade Desk, Baillie Gifford (Trades, Portfolio) stands out with a substantial holding of 40,984,017 shares, accounting for 8.36% of the company's shares. Harbor Capital Appreciation Fund (Trades, Portfolio) and Catherine Wood (Trades, Portfolio) also hold notable positions, with 2,304,401 shares (0.47% share percentage) and 2,149,654 shares (0.44% share percentage), respectively. These investments by prominent investors underscore the confidence in The Trade Desk's business model and future prospects.
Competitive Landscape
In comparison to its competitors, The Trade Desk holds its own in the software industry. Datadog Inc (DDOG, Financial) has a market cap of $42.52 billion, Autodesk Inc (ADSK, Financial) is valued at $55.35 billion, and Ansys Inc (ANSS, Financial) at $28.81 billion. These figures place The Trade Desk in a competitive position, with a market cap that reflects its strong market presence and growth potential.
Conclusion
In summary, The Trade Desk Inc's recent stock performance and valuation indicate a company that is not only growing rapidly but also maintaining profitability and efficiency in its operations. The company's growth metrics and the confidence shown by its significant shareholders suggest a positive outlook. When juxtaposed with its competitors, The Trade Desk's market position appears robust, with the potential to continue its upward trajectory in the software industry.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
