EPS Growth

EPS Growth refers to the rate at which a company's Earnings Per Share (EPS) increases over a specified period—typically year-on-year or over a multi-year compound annual growth rate (CAGR). EPS = Net Profit ÷ Total Shares Outstanding. Sustained EPS growth is one of the most reliable indicators of a company's long-term wealth-creation potential. Investors use the PEG ratio (P/E divided by EPS growth rate) to determine whether a stock's current valuation is justified by its earnings growth trajectory—a PEG below 1 may indicate undervaluation.