GlossaryIntermediate
Earnings Growth Rate
The percentage change in a company's earnings over a period, measuring bottom-line profitability expansion.
The earnings growth rate measures the percentage change in a company's net income (or earnings per share) between two periods, measuring bottom-line profitability expansion rather than top-line revenue growth alone.
Earnings growth can outpace revenue growth (through margin improvement) or lag behind it (through rising costs), making the comparison between the two genuinely informative about a company's underlying operating efficiency trend. See Kaavon's dedicated Earnings Growth Rate article for the full calculation.
Examples
- Earnings growth outpacing revenue growth over several periods can indicate improving operating margins, not just a larger business.
- Earnings growth, unlike revenue growth, directly reflects a company's bottom-line profitability trend, not just the scale of its business activity.