EPS Growth Rate Calculator

EPS Growth Rate (CAGR)

Earnings Per Share (EPS) growth rate measures how quickly a company is increasing its profitability on a per-share basis. It is calculated as a Compound Annual Growth Rate (CAGR), meaning the annualized rate that would take EPS from the starting value to the ending value over the period.

Formula:

EPS CAGR = (EPS_end / EPS_start) ^ (1 / years) - 1

What EPS is:

EPS = Net Income / Diluted Shares Outstanding

Why per-share matters: A company can grow net income by issuing more shares, and that dilutes existing shareholders. EPS growth captures whether earnings are growing relative to the shares you actually own.

Typical EPS growth benchmarks:

EPS growth and the PEG ratio: The growth rate is the denominator of the PEG ratio, which is P/E divided by the growth rate expressed as a whole number. A stock on a P/E of 30 growing EPS at 30% has a PEG of 1.0, the level Peter Lynch treated as fair value in “One Up on Wall Street.” Below 1.0 you are paying less for each point of growth than the market average; above 2.0 the price already assumes the growth arrives. Enter a P/E below and the calculator works it out from the CAGR it just measured.

The catch with PEG, and it is a real one: the growth rate belongs in it as a forward estimate, and what this page measures is history. A company that grew 30% a year while expanding into an empty market may grow 8% next year. Use the historical figure as a sanity check on the analyst estimate, not as a substitute for it.

Limitations:

• Buybacks flatter EPS. Fewer shares makes the per-share figure grow even when profits are flat, so check net income growth alongside it.
• One-time items such as asset sales and write-downs distort both ends of the period. Use adjusted EPS where the company reports it.
• A negative starting EPS breaks the formula entirely. A ratio of a positive to a negative number raised to a fractional power has no useful interpretation, so the calculator refuses rather than printing a confident-looking figure.
• Two endpoints are two endpoints. A company that earned $2.50, collapsed to $0.30, then recovered to $5.80 shows the same CAGR as one that climbed steadily, and they are not the same company.

Projecting forward EPS:

Future EPS = Current EPS × (1 + growth rate) ^ years

The projection is arithmetic, not a forecast. Nothing compounds at 30% forever, and the further out the line runs the more it is showing you what the assumption implies rather than what will happen.