Growth Rate in Earnings per Share

The Earnings Per Share (EPS) growth rate is expressed as a percentage and shows the annualized rate of growth of EPS.

Formula:
EPS Growth Rate = (EPS at end - EPS at beginning) / EPS at beginning

Example 1:
The common stock of Company B has an EPS of $1.50 in Year 1, and $2.00 in Year 2. Thus, the change in EPS = 2.00 - 1.50 = $0.50, and then you simply divide the change in EPS by the earnings per share at beginning to get the Earnings Per Share growth rate:
(0.50 / 1.50) * 100% = 33.33%

Example 2:
Following are the earnings per share for the past 4 years:
2007 - $0.30
2008 - $0.55
2009 - $0.80
2010 - $1.00
Calculate the earnings per share growth rate.

Solution:
Year 2008 = (0.55 - 0.30) / 0.30 = 83.3%
Year 2009 = (0.80 - 0.55) / 0.55 = 45.5%
Year 2010 = (1.00 - 0.80) / 0.80 = 25%

* Next: How to Calculate Earnings Per Share (EPS)
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