Bull of the Day: The Trade Desk (TTD) – May 17, 2018

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Trading publicly since 2016, The Trade Desk (TTD Free Report) is a company that specializes in programmatic advertising. It utilizes a self-service, cloud-based computer platform where ad buyers create, manage, and optimize data-driven digital advertising campaigns; these campaigns include display, video, audio, native, and social, all across a multitude of devices like computers, cell phones, and connected TV.

The Trade Desk is headquartered in Ventura, CA, and operates primarily in the U.S., Europe, and Asia.

Blowout Earnings Send Shares Soaring

The Trade Desk absolutely crushed estimates across the board for its fiscal 2018 first quarter.

Revenues surged 61% year-over-year, hitting $86 million and soaring way past the consensus estimate of $73 million. Adjusted income came in at $15.3 million, which produced earnings of 34 cents per share, handily beating the Zacks Consensus Estimate of 10 cents per share.

The company noted that much of this quarter’s growth came from its key divisions: mobile, video, connected TV, and audio. In particular, growth in mobile video was up 160% year-over-year and mobile in-app revenue grew 110%, while connected TV ads skyrocketed 2,000%.

Additionally, customer retention rates were above 95% for the 18th consecutive quarter.

As a result, TTD stock rallied well over 46%, or up around $24, clearly suggesting investors loved this report.

Raised Guidance

The Trade Desk increased its 2018 full-year outlook, and is now expecting revenues of at least $433 million, with adjusted EBITDA of $133 million.

Both figures are up 40% year-over-year from fiscal 2017 levels.

As for Q2, the company anticipates revenue of $103 million and adjusted EBITDA of $30 million.

Earnings Outlook

For TTD, its bottom line is trending upward for the foreseeable future.

While earnings are expected to decline about 17.3% for the current quarter, five analysts have revised estimates upwards recently; none have cut their outlook for the period during the same time period. The Zacks consensus has moved seven cents higher in the past 60 days.

Fiscal 2018 figures are looking pretty great, with five upwards estimates in the past two months. The Zacks consensus estimate trend has jumped from $1.67 per share to $1.97 per share.

Analysts are feeling optimistic for fiscal 2019 as well, with five moving their estimate higher in the last 60 days.

TTD has an average earnings surprise of 115.2%.

TTD: What’s Next for the Stock?

Shares of The Trade Desk have gained just over 80% since the start of the year and around 53% in the past one-year period. In comparison, the S&P 500 has gained 1.9% and 15.6%, respectively.

TTD is currently trading at a forward P/E of 40.8X.

Its industry, Internet-Services, has lost about 4.3% year-to-date, and the group sits in the bottom 34% of all industries ranked by the Zacks Industry Rank. But, TTD is one of the top performers, especially when compared to industry peers like Zillow Group (ZG Free Report) and Angie’s List (ANGI Free Report) .

Taking into account its impressive industry standing, as well as its expected earnings growth, The Trade Desk could be an exciting opportunity for investors looking to get in to the broader internet space.

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2018-05-17 10:30:00

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