1. What is Stock Growth Rate?

The stock growth rate (g) measures the percentage increase in a company's earnings per share (EPS) from one period to another. It's a key metric for investors evaluating a company's performance and future potential.

2. How Does the Calculator Work?

The calculator uses the growth rate formula:

Where:

• \( EPS1 \) — Current earnings per share (USD)
• \( EPS0 \) — Previous earnings per share (USD)
• \( g \) — Growth rate (decimal)

Explanation: The formula calculates the relative change in EPS between two periods, showing how much the company's earnings have grown.

3. Importance of Growth Rate Calculation

Details: Growth rate is crucial for valuation models (like DCF), comparing companies, and making investment decisions. Consistent growth often indicates a healthy, expanding business.

4. Using the Calculator

Tips: Enter both EPS values in USD. EPS0 must be greater than 0. The result shows as a percentage (e.g., 0.15 = 15% growth).

5. Frequently Asked Questions (FAQ)

Q1: What's a good growth rate?
A: Varies by industry, but generally 10-25% annually is strong. Compare to industry peers for context.

Q2: Can growth rate be negative?
A: Yes, if EPS1 < EPS0, indicating declining earnings.

Q3: Should I use quarterly or annual EPS?
A: Typically use annual EPS for YoY comparisons, but quarterly can show shorter-term trends.

Q4: How many periods should I compare?
A: Multi-year comparisons (3-5 years) give better insight than single-period changes.

Q5: What affects EPS growth?
A: Revenue growth, margin expansion, share buybacks, and one-time items can all impact EPS growth.