Fundamental Growth Filters

In this article we will discuss the fundamental filters related to the Growth of a stock. All these filters are available in our stock screener and can be found on the Fundamental tab.

EPS Growth

This filter tells us something about the profit growth a company realizes. There are several intervals on which this filter can be used. For example, you can choose EPS Growth 1Y, which compares the earnings growth of the last twelve months to the previous 12 months. The EPS Growth 5Y calculates the average growth year on year of the past 5 full years.

Another possibility is EPS Growth next Y, which compares earnings growth for the current year with an estimate of earnings growth for next year. EPS Growth next 2Y goes one step further and compares current earnings growth over the next two years (estimates). EPS Growth Q2Q does not use full years but only quarters. It compares the earnings in the last reported quarter to the earnings in the same quarter in the year before. (For instance Q1 17 will be compared to Q1 2016).

Profit growth per share is an important factor to accurately appreciate a company. Assume that company A achieves a profit per share of 5 and company B gains a per share of 7. At first sight, company B seems to be a better option due to higher earnings per share. However, if the following year shows that earnings per share for business A have risen from 5 to 6 and for company B from 7 to 8, the situation is slightly more nuanced... After all, profit growth for company A is 20% while for company B 'only' +/- 14%.

Large-scale companies will realize a rather stable but slightly less strong profit growth, while the same profit growth will rather be more volatile in young (growth) companies.

Revenue Growth 5Y

This concept really needs little explanation. It is about the average revenue growth a company realizes over the last five years. This figure tells you more than just looking at the amount of revenue in one year. Based on the revenue growth in the past, investors can get an idea of the potential future revenue growth of the company.