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Bull of the Day: The Trade Desk (TTD)

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The Trade Desk (TTD - Free Report) has seen its shares soar over 70% this year alone as the programmatic advertising firm continues to grow in a marketing environment that will only see algorithmic, real-time bidding expand. Looking ahead, The Trade Desk is expected to grow both its top and bottom-lines as it gains more traction and bolsters its business through artificial intelligence, from audio and mobile to connected TVs.

Business Overview

The Trade Desk essentially allows companies who want to advertise the chance to find their target consumers in a more precise, efficient, and modern way. Fewer companies and advertisers want to deal with insertion orders that call for X amount of impressions to appear on website Y or TV channel Z, only to find out how the campaign performed after the ad run is over. This is where the Ventura, California-headquarter firm comes in.

The Trade Desk and the programmatic approach—which has become an ad industry mainstay—allows clients to utilize its cloud-based platform to create, manage, and optimize data-driven digital advertising campaigns across a range of channels and devices in real time. These days, advertisers know that they can turn to Google (GOOGL - Free Report) and Facebook (FB - Free Report) to reach massive audiences. TTD allows their clients to reach giants like these and find consumers across multiple channels, apps, and websites, across connected TVs, audio, mobile and more.

 

 

Growth Plans

TTD rolled out its own AI technology it calls Koa last summer to help automatically surface data-driven recommendations in real-time to improve ad campaigns. The process allows customers to get a more market-driven price on their ads, reach the right target audience on the right devices, and more. In the end, non-ad supported services such as Netflix (NFLX - Free Report) , Amazon Prime (AMZN - Free Report) , Spotify (SPOT - Free Report) , and soon enough Disney (DIS - Free Report) , Apple (AAPL - Free Report) , have made consumers harder to reach. Therefore, companies big and small need a more modern, data-driven way to advertise, and The Trade Desk seems poised to benefit from these needs.

Investors should also note that The Trade Desk recently launched a programmatic ad buying platform in China. The firm also said that its newer connected TV and audio channels “grew multiples faster” than its more mature units, which is a good sign as smart TVs from the likes of Roku (ROKU - Free Report) and digital audio and podcasts proliferate. On top of that, The Trade Desk boasted that its customer retention rate remained over 95% during Q1, “as it has for the previous 21 quarters.”

Outlook & Earnings Trends

The digital-advertising platform operator is coming off a better-than-projected Q1 of fiscal 2019. The company’s adjusted quarterly earnings soared 44% to reach $0.49 per share and crush our $0.25 per share Zacks Consensus Estimate. Meanwhile, The Trade Desk’s first-quarter revenue jumped roughly 41% to $120.99 million and also top estimates.

Looking ahead, our current Zacks Consensus Estimate calls for the company’s second-quarter revenue to soar over 38% to reach $155.09 million. Peeking further ahead, TTD’s full-year revenue is projected to jump over 36% to touch $649.96 million.  

At the bottom end of the income statement, The Trade Desk’s adjusted Q2 earnings are projected to jump 13.3% to $0.68 per share. The company’s fiscal 2019 earnings are then expected to pop 8.5% to $2.93 a share, with 2020’s earnings projected to come in 22.7% higher than our current-year estimate.  

As we mentioned earlier, TTD blew past our Q1 2019 earnings estimate by 96%. Jumping back a little further, the firm topped our bottom-line estimates by over 32% in Q4, Q3, and Q2 of 2018. On top of that, The Trade Desk has seen its earnings estimate revision activity trend heavily in the right direction recently, especially for fiscal 2019 and 2020. This means that at least some analysts are more optimistic about the advertising platform company’s bottom line expansion, which is often a good sign.

 

 

Bottom Line

Shares of TTD are up roughly 144% over the last 12 months, which destroys its industry’s roughly 3% average and the S&P 500. And as the chart at the top shows, The Trade Desk stock has been a top performer since it went public in 2016. TTD stock closed regular trading Tuesday at $199.03 per share, down 15% from its 52-week intraday trading high of 52-week $232.70.

The firm’s positive earnings estimate revision trends help The Trade Desk earn a Zacks Rank #1 (Strong Buy) right now. TTD’s valuation metrics are still pretty stretch at the moment, which means value investors might want to stay away. Yet, for those searching for outsized growth in a potentially booming industry, The Trade Desk could be a stock to consider buying.

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