Earnings per Share EPS Growth Rates

Fundamental Analysis

Earnings per Share (EPS) Growth Rate refers to the percentage increase or decrease in the earnings per share of a company over a specific period of time. It is an essential metric used in fundamental analysis for evaluating the profitability of a company. EPS growth rate tells investors how much profit the company made for each outstanding share of common stock. A higher EPS growth rate indicates that the company is generating more profit per share than in the previous period, which is usually a good sign for investors.

The formula for EPS Growth Rates is:

EPS Growth Rate = [(Current year EPS - Previous year EPS) / Previous year EPS] x 100

For example, if a company*s EPS in the current year is $3 and the EPS in the previous year was $2, the EPS Growth Rate would be:

EPS Growth Rate = [(3-2) / 2] x 100 = 50%

This implies that the company*s EPS has grown by 50% over the period.

EPS growth rate is used in fundamental analysis to evaluate a company*s profitability and to compare it to other companies in similar industries or sectors. A higher EPS growth rate is generally seen as a positive indication that the company is performing well and is likely to continue to grow its earnings in the future. However, it should be noted that a high EPS growth rate may not always be sustainable and may be influenced by temporary or unsustainable factors such as one-time gains or favorable market conditions.

EPS Growth Rate can also be used to estimate the future value of a company*s stock. The higher the EPS growth rate, the more valuable the company*s stock is likely to be. Conversely, if the EPS growth rate is negative or very low, it may indicate that the company is experiencing financial difficulties.

In conclusion, EPS growth rate is an important metric in fundamental analysis used to evaluate a company*s profitability and potential future growth and is usually calculated by investors to determine a company*s stock value.




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    The companys earnings divided by the average number of shares outstanding for the period, giving effect to assumed dilution from outstanding stock options and restricted stock units. Earnings per Share
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