EPS Growth Rate Calculator
From beginning and ending EPS, compute the growth rate of earnings per share.
Input Data
Results
At a glance:EPS Growth Rate = (ending EPS − beginning EPS) ÷ beginning EPS × 100%. Because it already accounts for share-count changes, it reflects the real per-share earnings growth better than total profit growth, and is a core input to the PEG ratio and growth-stock analysis. It is most meaningful when both beginning and ending EPS are positive; with zero/negative beginning EPS the percentage loses meaning.
Formula
EPS growth rate = (ending EPS − beginning EPS) ÷ beginning EPS × 100%.
PEG ratio = P/E ÷ EPS growth rate (%).
$$$\\dfrac{2.5 - 2.0}{2.0}\\times100\\%=25\\%$$$$$PEG $PEG = \\dfrac{P/E}{g}$$$How to Use
- Enter the earlier-period EPS (beginning EPS).
- Enter the later-period EPS (ending EPS).
- View the EPS growth rate.
EPS growth rate at different beginning/ending EPS
| Beginning EPS (HK$) | Ending EPS (HK$) | Growth rate | Note |
|---|---|---|---|
| 2.00 | 2.50 | +25.00% | Earnings grew |
| 1.50 | 1.80 | +20.00% | Steady growth |
| 3.00 | 2.70 | −10.00% | Earnings fell |
Case Studies
Case 1: Compute the EPS growth rate
A company: last year EPS HK$2.00, this year HK$2.50.
EPS growth = (2.50 − 2.00) ÷ 2.00 × 100% = 25%.
Interpretation: EPS grew 25% in a year, strong momentum. If P/E is 20×, PEG = 20 ÷ 25 = 0.8 (<1, generally fair or cheap). EPS growth is key to judging growth stocks and valuation — high growth often supports a higher P/E.
Case 2: Why EPS growth, not total profit growth
Suppose a company's total profit rose from HK$10M to HK$12M (+20%), seemingly fine. But it issued many new shares for funding, shares from 4M to 6M (+50%), so EPS fell from 2.50 to 2.00 — per-share earnings actually 'fell 20%'.
Same company: total profit +20% but EPS growth −20% — opposite signs.
Interpretation: total profit growth can be 'watered down' — bigger business via share issuance lifts total profit but share count grows faster, diluting per-share earnings. EPS growth already counts share changes and reflects real per-share growth. Caveat: single-period growth is prone to base effects and one-offs; use multi-year CAGR with valuation (PEG).
FAQ
Why look at EPS growth rather than total profit growth?
Because total profit growth can be 'watered down'. If a company issues new shares to expand, total profit may rise while the share count also rises, so per-share earnings may not grow or can even fall. EPS growth already factors in share-count changes and better reflects real per-share growth. What matters to shareholders is each share earning more, not total profit inflated by endless share issuance.
Does high EPS growth mean it is worth buying?
Not necessarily. Beware: (1) base effect — if last year's EPS was unusually low (just recovering from a loss), the rate looks huge but is unsustainable; (2) one-off gains (asset sales) can inflate current EPS, a false high; (3) whether high growth continues depends on industry outlook and competitiveness. Even if growth is real, if the price already reflects it (high P/E, high PEG), the return may be limited. Use multi-year CAGR with valuation.
What if beginning EPS is zero or negative?
If beginning EPS is zero, division by zero makes the rate undefined — this calculator returns 0, but that is only a technical fix, not a real reflection (moving from no profit to profit is a qualitative leap percentages cannot express). If beginning EPS is negative (a loss), the percentage loses intuition: e.g. from −1 to +1 the formula gives −200%, a 'negative growth' that is absurd. For turnarounds or loss-making beginnings, compare absolute EPS changes or focus on the qualitative shift from loss to profit.
What is the PEG ratio and how does EPS growth help valuation?
PEG (Price/Earnings to Growth) = P/E ÷ EPS growth rate (%), popularised by Peter Lynch to fix P/E's ignoring of growth. A high-growth stock often has a high P/E that looks 'expensive', but with its growth counted the high P/E may be fair. Example: A P/E 20, growth 25% → PEG 0.8; B P/E 15, growth 10% → PEG 1.5. By P/E alone B (15×) looks cheaper than A (20×), but counting growth A's PEG (0.8) is lower — cheaper for its growth. Rule of thumb: PEG ≈ 1 is fair; well below 1 (0.8) possibly undervalued; well above 1 (1.5, 2) possibly pricey. But PEG relies on the growth assumption, which is hard to forecast; a distorted growth rate (one-off gains) distorts PEG too. Use sustainable multi-year CAGR and industry context, not PEG alone.
Why does the rate distort at zero/negative beginning EPS, and what to do?
When beginning EPS is zero or negative, the percentage formula breaks mathematically and in meaning. Beginning EPS = 0: denominator zero, undefined — this calculator returns 0, but that hides a real qualitative leap (no profit → profit). Beginning EPS negative (loss): the sign flips absurdly — from −1.00 to +1.00 (clear improvement) gives (1−(−1))÷(−1) = −200%, a 'negative growth'; from −2.00 to −1.00 (narrowing loss) gives −50%. Both contradict reality. Correct approach: (1) do not use the percentage; compare absolute EPS change (e.g. −1.0 to +1.0 means +HK$2.0 per share); (2) focus on the qualitative shift from loss to profit; (3) for trend, watch whether the loss keeps narrowing and when it turns positive, and the sustainable level after. Percentages only fit when both EPS are positive; with zero/negative, return to absolute values and qualitative judgement.
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References
Content review: Calculatorism Finance Team. Results are for reference only; please refer to the relevant authorities for the official figures.