Growth: what the metrics mean
How much faster a company earns than a year or several years ago: revenue, earnings, EBITDA, cash flow. Year over year (YoY) compares the latest year with the one before, CAGR is the average annual rate over three or five years.
Revenue Growth (YoY) — sales growth over the year
Sales for the last twelve months against the previous twelve. The most honest growth line: it is the hardest to dress up with accounting, and it is the first to show that demand for the product has run out.
Revenue Growth (FWD) — expected sales growth
The sales growth analysts expect next year. Compared with the actual YoY: a slowdown in the estimate against a strong actual is what the market prices in ahead of time.
EBITDA Growth (YoY) — EBITDA growth over the year
Earnings before interest, taxes, depreciation and amortization, year over year. Growing faster than sales — operating leverage is working, and the company earns more on every new dollar of sales than before.
In detail, with an example →EBITDA Growth (FWD) — expected EBITDA growth
The same growth, but by analyst consensus for next year.
EBIT Growth (YoY) — operating earnings growth
Operating earnings (after depreciation, before interest and taxes) year over year. Stricter than EBITDA: it includes the wear of equipment that a capital-heavy business will have to pay for in cash.
EBIT Growth (FWD) — expected EBIT growth
The operating earnings growth expected next year.
EPS Diluted Growth (YoY) — earnings per share growth
Earnings per diluted share year over year. “Diluted” means the denominator counts employee options and convertibles, i.e. every share that may appear. Growing slower than total earnings — the company is diluting shareholders by issuing new stock.
EPS Diluted Growth (FWD) — expected EPS growth
The adjusted earnings per share growth analysts expect next year. This is the line that most often moves the price.
EPS GAAP Growth (YoY) — reported EPS growth
The same, but earnings are taken under GAAP, with all one-off items. Jumps around more than Non-GAAP: one large write-off turns the year over.
EPS GAAP Growth (FWD) — expected GAAP EPS growth
The forecast growth of reported earnings per share.
EPS FWD Long Term Growth — long-term earnings growth (3–5 years)
The average annual EPS growth rate analysts expect over three to five years. This is the number in the denominator of PEG; it is the “softest” of them all — forecasts years ahead rarely come true.
Levered FCF Growth (YoY) — free cash flow growth
Free cash flow after interest on debt, year over year. This is the money actually left for shareholders after all expenses and investments — it pays dividends and buys back stock.
In detail, with an example →Operating Cash Flow Growth (YoY) — operating cash flow growth
Cash from the core business, year over year. Earnings grow but the cash flow does not — the money is getting stuck in inventory and receivables, an early sign of trouble.
Operating Cash Flow Growth (FWD) — expected cash flow growth
The operating cash flow growth expected next year.
ROE Growth (YoY) — return on equity growth
What changes is not earnings but the return on equity itself. Growing — every dollar a shareholder put in now brings more than before.
In detail, with an example →ROE Growth (FWD) — expected ROE growth
The change in return on equity expected next year.
Working Capital Growth (YoY) — working capital growth
Working capital is inventory and receivables minus payables — money frozen in day-to-day operations. The line cuts both ways: in a growing business it grows with sales, but growth that outpaces sales means overstocked warehouses and customers who stopped paying on time.
CAPEX Growth (YoY) — capital spending growth
How much more the company invested in equipment, capacity and construction. The rating counts growth as a plus — a bet on future sales; the flip side is the same bet: capital spending reduces free cash flow today and pays off only if the demand arrives.
EBITDA Growth (3Y CAGR) — EBITDA growth over 3 years
The average annual EBITDA growth rate over three years: does growth last longer than one lucky year.
EBITDA Growth (5Y CAGR) — EBITDA growth over 5 years
The average annual EBITDA growth rate over five years.
Revenue Growth (3Y CAGR) — sales growth over 3 years
The average annual sales growth rate over three years — a smoothed version of the annual figure.
Revenue Growth (5Y CAGR) — sales growth over 5 years
The average annual sales growth rate over five years.
Total Operating Revenue Growth (YoY) — total revenue growth
All operating revenue year over year. A separate line for banks, insurers and REITs, whose revenue comes from interest, fees and rent rather than product sales.
Total Operating Revenue Growth (3Y CAGR) — over 3 years
The average annual growth rate of total operating revenue over three years.
Total Operating Revenue Growth (5Y CAGR) — over 5 years
The average annual growth rate of total operating revenue over five years.