EPS CAGR (5y / 10y)

Growth

The compound annual growth rate of diluted earnings per share over roughly 5 and 10 years.

Formula

EPS CAGR = (latest diluted EPS ÷ base-year diluted EPS)^(1 ÷ years) − 1

Why it matters

Per-share earnings growth is what a shareholder actually receives from growth. It combines three levers: revenue growth, margin change, and share-count change. A company that grows revenue 5% but shrinks its share count 3% a year can compound EPS near 8–9% — which is why EPS growth can exceed revenue growth for years at well-run businesses. Over long horizons, stock returns track EPS growth plus dividends more closely than anything else.

What good looks like

Double-digit EPS CAGR sustained over a decade is excellent. Mid-single digits is respectable for a mature company. EPS growing much faster than revenue for many years usually means margin expansion or buybacks — worth knowing which, since buybacks are more repeatable than endless margin gains. We split-adjust historical share counts and EPS so the series is comparable across stock splits.

Caveats

EPS is an accounting number: one-time charges, tax changes, and write-downs make it noisier than revenue or cash flow. A negative or near-zero base year makes the CAGR meaningless (we return no value when the base is not positive). Companies can also flatter EPS with aggressive buybacks funded by debt — check debt/FCF and share change alongside this number.