Advertising has changed substantially in recent years. Very few companies have really pushed the envelope in the area of digital advertising campaigns. The Trade Desk (NASDAQ:TTD) is one of the few true standouts, and that could be a good thing long term for TTD stock.
The Trade Desk’s fourth-quarter earnings provided a window into the company’s financials. It is clear that The Trade Desk is doing well. The company’s groundbreaking lineup of products should also encourage any current or prospective investor in TTD stock.
Strength in Numbers
The Feb. 27 announcement of The Trade Desk’s earnings results provided key insights into the company’s financial health.
For the fourth quarter, The Trade Desk’s adjusted earnings came to $1.49 per share. That’s a highly impressive 27.35% beat compared to the analyst consensus estimate of $1.17. Better yet, it represents an increase of 36.7% compared to the adjusted earnings per share of $1.09 from the same quarter of the prior year.
Next, we can examine The Trade Desk’s sales for the quarter. The analyst consensus for this metric was $213.37 million. But with the company reporting $215.94 million, the actual result beat that figure by 1.2%. That’s not a massive beat, but it is still encouraging. Even better, it represents a whopping 34.57% improvement over the sales the same quarter of the prior year, which amounted to $160.47 million.
With this in mind, it’s easy to see why The Trade Desk announced ambitious forward-guidance numbers for the upcoming first quarter — as well as the full year. The Trade Desk projects sales to total $169 million for the first quarter, which is higher than the consensus estimate of $161.2 million. Furthermore, the company projects sales of $863 million for fiscal-year 2020. That represents an increase compared to the $859.98 million consensus estimate.
Drivers of Growth
The Trade Desk founder and CEO Jeff Green had every reason to be proud of those numbers. He added a few numbers of his own, and commented on how his company stands in relation to the competition:
“We also generated $108.3 million in net income and $213.9 million of adjusted EBITDA. We continue to deliver strong revenue growth while also generating profitability that is significantly higher than nearly all other comparable software and internet companies of our size.”
Green also mentioned that the company spent more than $1 billion in the fourth quarter. Moreover, The Trade Desk spent $3.1 billion in 2019, an annual record for the company.
That said, investors might be concerned about The Trade Desk spending so much capital. However, spending can be justified under the right circumstances. Spending can be a smart move when it promotes growth and profitability. As Green explained, “This record spend helped drive 39% revenue growth to $661 million in 2019.”
Additionally, Wells Fargo analyst Brian Fitzgerald was evidently impressed with The Trade Desk’s fiscal performance. He upgraded his rating on the company to “overweight” from his previous rating of “equal-weight.” However, Fitzgerald’s price target for TTD stock remains $310. Overall, though, this is perfectly reasonable and investors should expect at least that much, if not more.
The Final Word on TTD Stock
The quarterly adjusted revenues and sales were a powerful one-two punch for The Trade Desk. It makes perfect sense for the company and the Wells Fargo analyst to post ambitious outlooks on TTD stock.
That said, this one gets a “B” rating from me.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
