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EPS Growth Rate Calculator
Calculate year-over-year EPS growth or multi-year CAGR. See if earnings per share growth is accelerating or decelerating — with an instant verdict.
Inputs
Most recent full-year or TTM diluted EPS
Prior full-year diluted EPS
Result
Formula
EPS Growth = (Current EPS − Prior EPS) ÷ |Prior EPS| × 100
Benchmarks
| Growth Rate | Signal |
|---|---|
| 20%+ | High growth — premium multiple warranted |
| 10–20% | Solid — S&P 500 outperformer |
| 5–10% | Moderate — in line with market |
| 0–5% | Slow — may lag inflation |
| Negative | Declining — investigate cause |
Understanding EPS growth
What EPS growth actually measures
Earnings per share growth measures how fast the company's profit available to shareholders is growing — per share. It combines three forces: revenue growth, margin expansion or compression, and share count changes from buybacks or dilution. When EPS grows faster than revenue, the company is either becoming more profitable (good) or buying back shares (worth checking).
Diluted EPS accounts for all potential share issuances (options, warrants, convertibles), making it the most conservative and most widely used figure for comparisons.
High EPS growth vs high-quality EPS growth
Not all EPS growth is equal. EPS can grow from: (1) genuine revenue expansion — the highest quality source; (2) margin improvement from operational leverage or pricing power — also high quality; (3) buybacks reducing shares — can be excellent capital allocation or a sign management can't find better uses for cash; (4) one-time tax benefits or asset sales — not repeatable.
Always ask what's driving the EPS growth. Revenue CAGR growing in line with EPS CAGR is a healthier signal than EPS outpacing revenue by a large margin.
EPS growth and valuation
The market typically pays a premium P/E multiple for higher expected EPS growth. The PEG ratio (P/E ÷ forward EPS growth rate) is the standard tool for growth-adjusting multiples. A PEG of 1.0 means you're paying $1 of P/E per 1% of growth — Peter Lynch's definition of fair value. Below 1.0 suggests potential undervaluation relative to growth.
The catch: PEG depends on the growth estimate. Analyst consensus EPS estimates are systematically optimistic by 5–10% on average. Use this calculator to backtest historical EPS CAGR before applying growth estimates.
Acceleration vs deceleration
The trajectory of EPS growth matters as much as the level. A company growing EPS at 15% with the rate accelerating (12%, 14%, 15%, 17%) is typically more valuable than one growing at 20% but decelerating (28%, 24%, 20%, 16%). Markets often price deceleration before it fully shows up in annual reports.
Use the Multi-Year CAGR mode to enter 3–5 years of EPS and see the year-by-year growth rate table. Consistent acceleration is a quality signal; widening swings suggest cyclicality rather than compounding.
How to use this EPS growth calculator
Find diluted EPS
From the income statement — look for "diluted earnings per share." Annual figures are in the 10-K; quarterly in the 10-Q. Use full-year EPS for clean comparisons and avoid mixing quarterly and annual figures.
Choose YoY or multi-year
For a quick year-over-year check, use YoY mode. For trend analysis — is growth accelerating or decelerating — enter 3–5 years in Multi-Year CAGR mode to see each period's growth rate.
Read the verdict
20%+ is high growth, 10–20% is solid, 5–10% is moderate, 0–5% is slow, negative is declining. Compare against the sector average — tech companies need higher rates to justify premium multiples.
Cross-reference revenue growth
Check whether EPS growth is tracking revenue growth. If EPS CAGR is 20% but revenue CAGR is 8%, understand what's bridging the gap — margin expansion and buybacks are common drivers.
Frequently asked questions
How do you calculate EPS growth rate?
EPS Growth = (Current EPS − Prior EPS) ÷ |Prior EPS| × 100. For a company with EPS of $5.25 this year and $4.10 last year: (5.25 − 4.10) / 4.10 × 100 = 28% growth. Use diluted EPS for comparability across companies.
What is EPS CAGR?
EPS CAGR (compound annual growth rate) is the smoothed annual growth rate over multiple periods. If EPS grew from $2.00 to $3.60 over 5 years, CAGR = (3.60/2.00)^(1/5) − 1 = 12.5%. CAGR smooths year-to-year volatility to show the underlying trend.
Is EPS growth or revenue growth more important?
Both matter. Revenue growth is the top-line driver; EPS growth is what shareholders actually capture after costs, taxes, and dilution. When EPS consistently outpaces revenue, the company is becoming more efficient. When revenue outpaces EPS, margins are being squeezed — a potential warning sign.
What causes negative EPS growth?
Negative EPS growth (EPS declining year-over-year) can come from: revenue contraction, margin compression (rising costs), increased share count from stock-based compensation or equity raises, higher interest expense from new debt, or one-time charges like impairments. Investigate which driver is causing the decline before concluding it's structural.
How does EPS growth relate to PEG ratio?
PEG = P/E ÷ EPS Growth Rate. A stock with a 25× P/E and 20% EPS growth has a PEG of 1.25 — slightly above Peter Lynch's fair-value threshold of 1.0. Higher EPS growth justifies paying a higher P/E multiple. Use the PEG Ratio Calculator for a full growth-adjusted valuation verdict.
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