LTM vs NTM Multiples

LTM (last twelve months), sometimes called TTM (trailing twelve months), is computed by taking the most recent full fiscal year, adding the year-to-date figures from the current period, and subtracting the same year-to-date figures from the prior year. So LTM = Full Year + Current Stub − Prior Year Stub. This 'stub' calculation rolls the financials forward to the most recent quarter without needing a full new fiscal year. LTM is grounded in audited actuals, which makes it objective and hard to dispute, but it's backward-looking and includes any one-time items unless you adjust them out.

NTM (next twelve months) uses consensus analyst estimates or management projections for the coming year. Because most companies are growing, the NTM denominator (revenue, EBITDA, EPS) is larger than the LTM denominator, so the resulting multiple is mechanically lower. A company at 12x LTM EBITDA growing EBITDA 20% would trade at roughly 10x NTM EBITDA. This is why you must NEVER mix periods within a comp set — comparing one company's LTM multiple to another's NTM multiple makes the LTM company look artificially cheap or the NTM company artificially expensive.

Markets are forward-looking, so investors and bankers generally prefer NTM (forward) multiples for valuation because price reflects future expectations, not past results. NTM is especially important for high-growth companies where trailing numbers badly understate the business. LTM is used when reliable estimates aren't available, for sanity-checking against hard actuals, in credit analysis (lenders care about demonstrated cash flow), and in private deals where forward projections are unaudited and self-serving. In a real comps output you'll typically show both LTM and NTM columns side by side.