Forward EPS Growth: formula and how to read it

How much analysts expect profit per share to grow in the next fiscal year. Analysts' consensus EPS for the fiscal year the company reports next (even if that year has just ended) compared with the diluted EPS of its latest reported fiscal year, as the change divided by the size of the reported figure (the absolute value method). Analysts usually forecast adjusted EPS while the reported figure is GAAP diluted EPS, so a company with big one-off charges can look better than it is; the figure is left blank when last year's consensus and the reported number are more than 3× apart. It is a forecast, not a result, and moves with every analyst revision.

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

Forward EPS growth = (analysts' consensus EPS for the next fiscal year − last reported fiscal year's diluted EPS) ÷ |last reported fiscal year's diluted EPS|

A company that earned $4.00 per share in its last reported fiscal year and is expected by analysts to earn $4.60 in the next has forward EPS growth of (4.60 − 4.00) ÷ 4.00 = 15%. The numbers are made up for illustration.

A higher figure means analysts expect profit per share to grow faster. It is most useful next to the price: a stock expected to grow 20% a year at a modest P/E is a different proposition from one at a very high P/E. Treat it as the market's expectation, which can be wrong in either direction.

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

• It is a forecast. Companies often beat or miss it, and analysts revise it after every report.
• Analysts usually forecast adjusted EPS (leaving out one-off items and often stock compensation), while the reported figure it is compared with is GAAP diluted EPS. For companies where the two differ a lot the growth looks better than it is, so Stock Meadow leaves the figure blank when last year's analyst figure and the reported number are more than three times apart.
• "Next fiscal year" means the year the company reports next, which can already have ended: a company with a September year end that hasn't reported yet is judged on the year that has just closed.
• Growth from a very small or negative base is extreme. It is capped at ±1000%, and a loss turning into a profit counts as growth.
• A forecast resting on one or two analysts is weak. Use the number-of-analysts filter to avoid those.

How Stock Meadow handles gaps. Usually blank when no analyst forecast covers the company, or the forecast and last year's reported figure are too far apart to compare (large one-off charges, or statements and forecasts in different currencies). 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.

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.

No fixed-recipe model scores it.

Read about every scoring model on the scoring models page.

• Forward PEG Ratio: price vs. profit, adjusted for expected growth.
• EPS Growth (Annual): how fast profit per share grew in the last fiscal year; changes once a year.
• EPS Growth (TTM): how fast profit per share grew over the last 4 quarters vs. the 4 before.
• EPS Estimate Revisions (30 Days): whether analysts have been raising or cutting profit forecasts over the past month.

What is forward EPS growth?

It is the growth in earnings per share that analysts expect for the company's next fiscal year, compared with the last year it reported. Unlike trailing growth, which measures what already happened, it measures what the market expects to happen.

Is forward EPS growth the same as the growth in PEG?

They are related but not identical. The forward PEG ratio divides the forward P/E by expected annual EPS growth from the data provider; this metric is the next-year consensus growth on its own, calculated by Stock Meadow from the consensus and the reported figures.

Why is forward EPS growth blank for some companies?

Smaller companies are often followed by no analysts at all. It is also blank when the analysts' figure for last year and the reported number are too far apart to compare, for example after large one-off charges or when statements and forecasts are in different currencies.

Is a higher or lower Fwd EPS growth better?

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

Why is Fwd EPS growth blank for some stocks?

It is usually blank when no analyst forecast covers the company, or the forecast and last year's reported figure are too far apart to compare (large one-off charges, or statements and forecasts in different currencies). Stock Meadow leaves the figure blank rather than guessing it.