Growth
Earnings growth
EPS growth
What it is
Year-over-year percentage change in net income. It's the test of whether revenue growth is translating to real value for shareholders.
How to read it
Ideally, earnings growth exceeds revenue growth — a sign of positive operating leverage (the company gets more profitable as it grows). If earnings grow slower than revenue, watch out for margin deterioration.
Common reference points
- Strong> 20%
- Solid10 – 20%
- Modest0 – 10%
- Declining< 0%
Orders of magnitude, not a rule: the same number does not mean the same thing from one sector to the next.
What it does not tell you
Very volatile quarter-to-quarter — annual comparison is more reliable. Also sensitive to one-time items (restructuring charges, tax gains) that can distort the reading.
Other measures — Growth
Educational content. Polaris is not a registered investment adviser and makes no recommendation.