EPS Growth Calculator
Print| EPS Increase / Decrease ($) | $0.00 |
While absolute Earnings Per Share (EPS) tells you how much profit a company generates per share today, institutional investors care most about corporate momentum. Sustainable stock price appreciation is driven primarily by annual Earnings Per Share Growth. Consistent EPS expansion indicates strong operational efficiency, pricing power, and disciplined capital allocation.
Our free Earnings Per Share Growth Calculator computes both single-year YoY EPS growth rates and multi-year Compound Annual Growth Rates (CAGR) to analyze long-term corporate earnings expansion.
How to Calculate EPS Growth Rate & CAGR
EPS growth can be measured annually or averaged over multi-year periods using compound growth math.
Single-Year YoY EPS Growth Formula:
YoY EPS Growth (%) = [ (Current EPS - Prior Period EPS) / Prior Period EPS ] × 100
Multi-Year EPS Compound Annual Growth Rate (CAGR) Formula:
EPS CAGR (%) = [ (Ending EPS / Beginning EPS)⁽¹ / ⁿ⁾ - 1 ] × 100
- Ending EPS: Realized EPS at the final year of the evaluation period.
- Beginning EPS: Realized EPS at the starting baseline year.
- n: Total number of growth years in the evaluation window.
Step-by-Step Multi-Year CAGR Example
Imagine a growth enterprise reported an EPS of $2.00 in 2022 (Beginning EPS). Over a 4-year period (n = 4), continuous business expansion increased its reported earnings to $3.86 in 2026 (Ending EPS).
Let’s calculate the multi-year compound annual EPS growth rate (CAGR):
EPS Expansion Ratio = $3.86 / $2.00 = 1.93
Exponent Step (1 / 4) = 0.25
(1.93)⁰.²⁵ = 1.1786
EPS CAGR = (1.1786 - 1) × 100 = 17.86% per year
| Fiscal Year | Realized EPS | YoY Growth Rate | Cumulative Multi-Year CAGR |
|---|---|---|---|
| 2022 (Baseline) | $2.00 | Baseline (0.0%) | Baseline |
| 2023 | $2.36 | +18.0% | 18.00% |
| 2024 | $2.78 | +17.8% | 17.90% |
| 2025 | $3.28 | +18.0% | 17.93% |
| 2026 (4-Yr Total) | $3.86 (+93.0% Total) | +17.7% | 17.86% Annual CAGR |
Frequently Asked Questions (FAQ)
What is a good EPS growth rate for stock selection?
In growth stock investing, an annual EPS growth rate of 15% to 25% or higher is considered strong. High-growth market leaders often achieve multi-year EPS CAGR exceeding 20% during expansion phases.
How does EPS growth factor into the PEG ratio?
The PEG Ratio (Price/Earnings to Growth) divides a stock’s P/E ratio by its annual EPS growth rate percentage. A stock with a P/E of 20 and an EPS growth rate of 20% has a PEG ratio of 1.0, which growth investors consider fair value.
Why can EPS growth outpace Net Income growth?
EPS growth can outpace overall net income growth if a company aggressively repurchases its own shares. Reducing the share count allows per-share earnings to grow faster than company-wide total net profit.