The EPS (Earnings Per Share) growth rate is the percentage rate that shows how good or bad an entity's performance is over a period of time. EPS growth rates are monitored by investors who put their money on a certain company. This percentage is computed with the use of the rates for two reporting periods. The rate can either be a negative one or a positive one.
Investors take note of this so that they can monitor the growth of their money based on their earnings per share on a certain company. It is a way to keep themselves informed on the statistical growth if their shares. The reports for rates can come quarterly or annually. There are easy formulae that you can use so that you can calculate EPS growth rates. Here are the steps to calculate these formulae:
- Formula 1 First, get the difference between the net earnings of the company and the dividends on the stocks. Divide this number by the number of outstanding shares that the company has; the rate that you will get is the EPS rate. This is an easy formula to use if you already have the details and values of the earnings of a company.
- Formula 2 There is another formula that you can use. It is essentially the same as the first formula, but the terms used are different. To be able to calculate the growth rate, first subtract the EPS for the first report from the EPS for the latest report. You must then divide the difference by the EPS at the first reporting period. This is the EPS growth rate.
- EPS Growth Rate Calculator If you do not want to bother with doing mathematical equations when looking for the growth increase of your stocks, you can simply use the EPS growth rate calculator on the website stockresearchpro.com. You will be able to see a Stock Research Pro EPS Growth Rate Chart where you can enter the values for the earnings of a company. You can enter up to five reports, and the chart will automatically provide the growth rate that you are looking for.
- Microsoft Excel Sheet You can also calculate for the relative rates of the EPS on Microsoft Excel. All you have to do is input the data on the fields and provide the formula that will automatically do the calculations for you. You must use the specific labels for each field to come up with the correct calculations. If you are putting values on the column B, the EPS will appear on the next column, which is C. The formula that you will use is '=AVERAGE((B2-B1)/B1)' The result that you will get is the EPS. Just repeat the steps for each column and change the numbers or letters as necessary.
These are some of the ways you can calculate the EPS growth rates. These are the best steps to take if you are an investor and want to keep track of your profit growth year after year.