Revenue Growth TTM

Revenue Growth

Revenue growth is a measure used  to see how good a company is at bringing in sales and a measure of how fast a business is growing.

A good company should have 5 consecutive years of revenue growth.   In addition, growth rates should be equal or higher than its P/E.  If the P/E is more than 2 times the growth rate, avoid buying the stock stocks.  (example: 8 % growth rate, P/E 16).

All things being equal, stocks with higher revenue growth rates are generally more desirable than those with slower revenue growth rates; however if the EPS growth has not increased proportionately, it’s likely due to a decrease in profit margin and an indication that a company is becoming less efficient at using its resources.

(Sales year 2 – Sales year 1) / Sales year 1 = Sales Growth

Revenue per Share –

Revenue per share does not take into account expenses or taxes. It is a helpful ratio when comparing sales return per share between companies in a similar industry, where companies with higher revenue per share ratios earn more money on their equity.

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