EPS Growth: formula and how to read it

How fast profit per share grew last year. Latest reported full-year diluted EPS compared with the preceding year, as the change divided by the size of the earlier year's figure (the absolute value method). A loss turning into a profit, or a loss shrinking, counts as growth.

Stock Meadow groups it under Growth, and shows it in tables as EPS growth.

EPS growth = (latest full-year diluted EPS − preceding year's diluted EPS) ÷ |preceding year's diluted EPS|

Diluted EPS rising from $2.00 to $2.30 is growth of 15%. A loss of $1.00 per share shrinking to a loss of $0.50 counts as growth of 50%. The numbers are made up for illustration.

A higher figure means earnings per share are growing faster. Dividing by the absolute value of last year's figure keeps the sign right when the earlier year was a loss.

When Stock Meadow ranks stocks, a higher figure scores better.

• Growth after a weak year is easy: a recovery can look dramatic.
• Buybacks raise EPS growth without growing the business.
• Capped at ±1000%, and blank when the earlier year's EPS was exactly zero or no earlier year exists.

How Stock Meadow handles gaps. Usually blank when there's no earlier full year to compare with, or earnings per share that year were exactly zero. Extreme values are capped at 1000%+.

Treat any single metric as one clue, and read the company's financial statements before drawing a conclusion. Stock Meadow's figures are research tools based on reported data, not investment advice.

Fixed-recipe models that score it: GARP (Peter Lynch).

In Weighted ranking, Z-score composite and Balanced (no weak link), you choose the metrics and weights yourself, so you can include it in a custom score.

Read about every scoring model on the scoring models page.

• Forward PEG Ratio: price vs. profit, adjusted for expected growth.
• Revenue Growth: how fast sales grew last year.
• P/E Ratio (Price-to-Earnings): what you pay for each dollar of profit.

What is diluted EPS?

Diluted earnings per share divides net income by the share count including shares that could be created by options and convertible securities, a more cautious figure than basic EPS.

Is a higher or lower EPS growth better?

When Stock Meadow ranks stocks, a higher figure scores better. That is a ranking convention, so read EPS growth alongside other measures and compare similar companies.

Why is EPS growth blank for some stocks?

It is usually blank when there's no earlier full year to compare with, or earnings per share that year were exactly zero. Stock Meadow leaves the figure blank rather than guessing it.