How to Calculate EPS Growth Rate

How to Calculate EPS Growth Rate
Increasing EPS is healthy for the underlying stock.

EPS Growth Rate Formula

To calculate EPS growth rate, you must first determine the earnings per share for the year just ended and for the prior year. Figure EPS by subtracting preferred stock dividends from after-tax net income and dividing the result by the number of shares of outstanding common stock. To calculate EPS growth rate, subtract EPS for the prior year from EPS for the year just ended. Divide the result by the prior year EPS and multiply by 100 to convert to a percentage. Suppose a company had EPS of $1.20 per share for the year just completed and EPS of $0.96 for the prior year. Subtract $0.96 from $1.20. Divide the result of $0.24 by $0.96 and multiply by 100. The EPS growth rate for this company works out to 25 percent.