1. What is EPS Growth Rate?

EPS (Earnings Per Share) Growth Rate measures the percentage change in a company's earnings per share over a specific period. It's a key indicator of a company's profitability growth and financial performance.

2. How Does the Calculator Work?

The calculator uses the EPS Growth Rate formula:

Where:

• \( EPS_{new} \) — Current period earnings per share
• \( EPS_{old} \) — Previous period earnings per share

Explanation: The formula calculates the percentage change in EPS from one period to the next, indicating how much the company's profitability has grown or declined.

3. Importance of EPS Growth Rate

Details: EPS growth is a critical metric for investors as it reflects a company's ability to increase profitability over time. Consistent EPS growth often leads to higher stock prices and is a key factor in investment decisions.

4. Using the Calculator

Tips: Enter both previous and current EPS values in USD. Ensure the previous EPS value is greater than zero for accurate calculation.

5. Frequently Asked Questions (FAQ)

Q1: What is considered a good EPS growth rate?
A: A growth rate above 10-15% is generally considered good, but this varies by industry and economic conditions. Consistent positive growth is more important than a single high percentage.

Q2: Can EPS growth rate be negative?
A: Yes, if current EPS is lower than previous EPS, the growth rate will be negative, indicating declining profitability.

Q3: How frequently should EPS growth be measured?
A: Typically measured quarterly (comparing to same quarter previous year) or annually. Year-over-year comparisons are most meaningful.

Q4: What factors can affect EPS growth?
A: Revenue growth, cost management, share buybacks, acquisitions, economic conditions, and industry trends can all impact EPS growth.

Q5: Is EPS growth the only important metric?
A: No, while important, it should be considered alongside other metrics like revenue growth, profit margins, and return on equity for comprehensive analysis.