What is EPS Growth Rate?
The Earnings Per Share (EPS) growth rate measures the percentage change in a company's earnings per share over a specific period, typically from one year to the next. It's a key indicator of how effectively a company is growing its profits on a per-share basis.
A positive and consistent EPS growth rate often signals a healthy and growing company, making it more attractive to investors. Conversely, a declining or inconsistent EPS growth rate might suggest underlying problems with the company's performance.
Formula Used:
The formula to calculate EPS Growth Rate is:
EPS Growth Rate = [ (EPS Current Year – EPS Previous Year) / EPS Previous Year ] * 100
How to Interpret the Results:
- Positive Growth Rate: Indicates that the company's earnings per share have increased, which is generally a good sign.
- Negative Growth Rate: Indicates that the company's earnings per share have decreased. This could be due to various factors like increased costs, declining revenue, or economic downturns.
- Zero Growth Rate: Means the EPS has remained the same between the two periods.
Example Calculation:
Let's say a company had an EPS of $2.00 in the previous year and $2.50 in the current year.
- EPS Current Year = $2.50
- EPS Previous Year = $2.00
Using the formula:
EPS Growth Rate = [ ($2.50 – $2.00) / $2.00 ] * 100
EPS Growth Rate = [ $0.50 / $2.00 ] * 100
EPS Growth Rate = 0.25 * 100
EPS Growth Rate = 25%
This means the company's EPS has grown by 25% from the previous year.
function calculateEpsGrowth() {
var epsCurrentYear = parseFloat(document.getElementById("epsCurrentYear").value);
var epsPreviousYear = parseFloat(document.getElementById("epsPreviousYear").value);
var resultDiv = document.getElementById("result");
if (isNaN(epsCurrentYear) || isNaN(epsPreviousYear)) {
resultDiv.innerHTML = "Please enter valid numbers for both EPS values.";
return;
}
if (epsPreviousYear === 0) {
resultDiv.innerHTML = "EPS Previous Year cannot be zero.";
return;
}
var epsGrowthRate = ((epsCurrentYear – epsPreviousYear) / epsPreviousYear) * 100;
resultDiv.innerHTML = "
Result:
";
resultDiv.innerHTML += "EPS Current Year: " + epsCurrentYear.toFixed(2) + "";
resultDiv.innerHTML += "EPS Previous Year: " + epsPreviousYear.toFixed(2) + "";
resultDiv.innerHTML += "
EPS Growth Rate: " + epsGrowthRate.toFixed(2) + "%";
}
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