Earnings Growth
How fast profits are growing year-over-year
Definition
Earnings growth measures the percentage increase in net income or EPS from one period to the next. While revenue growth shows the top line, earnings growth shows whether the company is translating sales into actual profit growth. Companies can grow revenue without growing earnings if costs rise faster than sales.
(Current EPS − Prior Year EPS) ÷ |Prior Year EPS| × 100
Example
If EPS was $2.00 last year and $2.60 this year, earnings growth = 30%.