Earnings Per Share Growth Calculator
Enter a starting EPS, an ending EPS, and the number of years between them. The calculator gives you the compound annual growth rate (CAGR), the total percentage change, and a full year-by-year EPS projection table. You can also enter an assumed future growth rate to project where EPS will land in the next year or beyond. Results update as you type.
What is EPS growth and why does it matter?
Earnings per share (EPS) is a company's net income divided by its weighted-average number of shares outstanding. EPS growth measures how quickly that per-share profit figure is rising over time, and it is one of the most widely watched signals in equity analysis. A company that consistently grows EPS is generally expanding its profitability, which tends to support a rising share price over the long run. Investors, analysts, and stock screeners use EPS growth alongside revenue growth, return on equity, and free cash flow growth to build a fuller picture of a company's earnings quality.
CAGR vs. total growth: which figure should you use?
Total growth is simply the percentage change from starting EPS to ending EPS regardless of how many years are in between. It is easy to compute and intuitive for short periods. Compound annual growth rate (CAGR) annualizes the same change, so you can compare companies or time periods of different lengths on an equal footing. For example, a company that doubles EPS in four years has a total growth of 100% but a CAGR of about 18.9%, while a company that doubles EPS in ten years has a CAGR of about 7.2%. CAGR is almost always the more useful figure when evaluating and comparing growth tracks.
Limitations of EPS growth as a standalone metric
EPS can grow for several reasons that do not all signal healthy business expansion. Share buybacks reduce the share count and mechanically lift EPS even when total earnings are flat or falling. One-time gains (asset sales, tax windfalls) can inflate a single year's figure. A rising EPS is more credible when it is supported by revenue growth and expanding or stable free cash flow margins. The PEG ratio, which divides the price-to-earnings ratio by the EPS growth rate, helps investors assess whether a growth premium in the share price is reasonable.
How to use the projection feature
Enter an assumed future growth rate and a projection horizon to see where EPS would land if that rate held steady. This is not a forecast - it is a mathematical projection that helps you stress-test scenarios. For a conservative case, try a rate below the historical CAGR. For a bull case, try the historical CAGR or higher. The year-by-year schedule below the chart lets you trace each annual step. The Rule of 72 output shows roughly how many years it would take for EPS to double at the assumed rate, a quick sanity check for long-run expectations.
EPS growth rate benchmarks
| CAGR range | Category | Typical context |
|---|---|---|
| Below 0% | Declining | EPS is shrinking; requires close scrutiny |
| 0% to 5% | Slow growth | Typical of mature, low-growth businesses |
| 5% to 15% | Healthy growth | Broadly considered solid for established companies |
| 15% and above | High growth | Strong, but verify it is sustainable and not buyback-driven |
General benchmarks used by equity analysts to contextualize annual EPS growth. Always compare against sector peers and multi-year trends.
Frequently asked questions
What is a good EPS growth rate?
There is no universal answer, because a good rate depends heavily on the company's sector, size, and economic cycle. As a rough guide, analysts generally treat annual EPS CAGR below 5% as slow, 5% to 15% as healthy for established businesses, and above 15% as high growth (though that pace must be verified as sustainable). Always compare a company's EPS CAGR against its industry peers and against its own historical average.
Why does the CAGR formula require both EPS values to have the same sign?
The CAGR formula raises a ratio to a fractional power, which is undefined in real numbers when the ratio is negative. If a company had negative EPS and later turned profitable, the mathematical result would be meaningless. In those cases, you can note the dollar-value improvement and the year of the turnaround, but the standard CAGR formula does not apply. This calculator returns a blank result when the two EPS figures have opposite signs.
How do share buybacks affect EPS growth?
Buybacks reduce the number of shares outstanding, which increases EPS even if total net income is unchanged. A company could show strong EPS growth entirely through buybacks while actual profitability is stagnant. To distinguish real earnings expansion from buyback-driven growth, compare EPS growth to net income growth and to revenue growth over the same period.
What is the Rule of 72 and how does it apply to EPS?
The Rule of 72 is a quick mental estimate: divide 72 by the annual growth rate (as a percentage) to find roughly how many years it takes for a value to double. At a 10% EPS CAGR, EPS would double in about 7.2 years (72 / 10). It is an approximation, best used as a sanity check rather than a precise forecast.
Should I use basic EPS or diluted EPS?
Diluted EPS is generally preferred for analysis because it accounts for all potential shares from stock options, convertible bonds, and other instruments that could dilute existing shareholders. Using basic EPS in isolation can overstate per-share earnings. When comparing across periods or companies, make sure you are consistent, either always basic or always diluted.
How is EPS CAGR different from revenue CAGR?
Revenue CAGR measures how fast the top line (total sales) is growing, while EPS CAGR reflects the bottom-line profit accruing to each share. A company can grow revenue faster than EPS if margins are compressing, or grow EPS faster than revenue through margin expansion or share buybacks. Both metrics together tell a more complete story than either alone.