EPS growth, or earnings per share growth, is a key metric for investors to consider when evaluating a company's performance and potential for future growth. EPS measures the net income earned by each share of a company's common stock, and growth in this metric indicates that the company is generating more profit per share over time.
EPS growth can be calculated by comparing the EPS of a company in different time periods, such as quarter-over-quarter or year-over-year. A company with a high EPS growth rate is generally considered to be performing well and may be a good investment opportunity.
One of the key benefits of EPS growth is that it takes into account the effects of dilution on a company's earnings. Dilution occurs when a company issues new shares of stock, which can reduce the amount of net income available to be distributed to existing shareholders. By calculating EPS growth, investors can see how much of a company's earnings are actually being distributed to shareholders, rather than being diluted by new stock issuances.
Another advantage of EPS growth is that it allows investors to compare the performance of different companies within the same industry. By comparing EPS growth rates, investors can see which companies are generating the most profit per share and potentially identify the most promising investment opportunities.
In addition to being a valuable metric for investors, EPS growth is also closely watched by analysts and market watchers. Companies with strong EPS growth may be more likely to receive positive coverage from analysts and be included in industry reports and indices.
Overall, EPS growth is a crucial indicator for investors to consider when evaluating a company's financial performance and potential for future growth. By tracking EPS growth, investors can gain insight into a company's profitability and make more informed investment decisions.