What is the last twelve months (LTM)?

Last twelve months (LTM) is the time period of preceding 12 months, also referred to as trading twelve months (TTM). LTM is widely used when referring to a company’s earnings and financial metrics such as revenue, profit or earnings per share (EPS) over the past year.

Read on to learn the last twelve month definition and its meaning for investors when reading company financial statements.

Publicly listed companies typically report financial earning statements every three months or every six months or at the end of every financial year. Terms like ‘last twelve months’ or ‘trailing twelve months’ are frequently used in company financial statements.

Studying a company’s earnings over a 12-month period allows investors to track its performance through various seasonal business cycles.

For example, a UK-based company selling woollen sweaters will see higher sales during winter while its sales will drop during summers. An investor looking only at the company’s quarterly report for three months ended September may misinterpret the low sales made during summer months. Investors looking at last twelve month financial statements will get a clearer picture of the company’s performance.

However, it should be noted that 12-month time periods are still considered short when examining a company’s performance and may be deemed inadequate for investment evaluations. Investors are advised to study earnings over a multi-year horizon, comparing those of the last twelve months to the previous years.

Last twelve months explained

Investors can also compare last twelve month financial metrics of a company like debt-to-equity ratio, price-to-earnings ratio and working capital ratio with figures from a year before or with last twelve month financial metrics of a competitor or industry average.

Comparing a company’s dividend paying attributes over multiple years is an important last twelve months example. Dividend-seeking investors often analyse the dividend yield of companies over multiple twelve month periods to review their long-term dividend-paying capabilities.

Let's see what the last twelve months means by looking at Apple’s (AAPL) earnings for fiscal year 2021.

The tech giant’s full year report for 2021 stated total net sales of $365.81bn in the last twelve months ended 25 September. Compared to sales from the previous year, which came in at $274.5bn, it showed that Apple performed well in its 2021 fiscal year, with sales rising by $91.31bn or about 33%. The report also revealed that Apple earned over 60% more in profit in the last twelve months ended 25 September 2021 compared to 2020, indicating the company’s strong financial health in that year.

Is insider trading legal?

According to the US SEC, illegal insider trading refers generally to buying or selling a security based on non-public information and breaching fiduciary duty or other relationship of trust and confidence. Insiders are allowed to buy and sell company shares, but they must register all transactions with the SEC.

Is insider trading profitable?

Insider trading can be profitable yet it is highly unfair to other market participants, and therefore can be prosecuted. The US SEC treats the detection and prosecution of insider trading violations as one of its enforcement priorities. In the US, company insiders are allowed to buy and sell company shares, but they must register all their transactions with the SEC.

What are the types of insider trading?

Some examples of insider trading cases have been filed against company employees, friends and family members of employees, government officials and political intelligence consultants.