Earnings Per Share Growth Rate (EPSGR) Made Easy

Earnings Per Share Growth Rate (EPSGR)

Earnings per share growth rate or EPSGR is the incremental rate of EPS over certain period of time (normally on yearly basis).
EPSGR is more important than EPS alone.
I'll show you why.

Given a situation that stock XYZ has EPS of $2 per share and stock ABC has EPS of $10 per share. At glance, you may find stock XYZ is more attractive from higher EPS.

But just don't invest yet.

A year later, stock XYZ has EPS of $2.50 per share while stock ABC has EPS of $11 per share. This translate into 25 per cent growth for stock XYZ and 10 per cent growth for stock ABC. Thus, stock XYZ are growing faster than stock ABC.

Earnings Per Share Example

So, how this affect you?

If you bought the stocks, you will find that stock XYZ will increase higher than stock ABC. As the stock prices has direct relationships with the EPS (from price earning ratio equation), you will be getting more profit from higher EPSGR.

EPSGR is also reflect the companies growth rate. Investing in growing companies can multiply your investment by several percentage.

Earnings Per Share Growth Rate (EPSGR)

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