Earnings growth

Earnings growth is the annual compound annual growth rate (CAGR) of earnings from investments. Earnings growth is the annual compound annual growth rate (CAGR) of earnings from investments. When the dividend payout ratio is the same, the dividend growth rate is equal to the earnings growth rate. Earnings growth rate is a key value that is needed when the Discounted cash flow model, or the Gordon's model is used for stock valuation. The present value is given by: where P = the present value, k = discount rate, D = current dividend and g i {displaystyle g_{i}} is the revenue growth rate for period i. If the growth rate is constant for i = n + 1 {displaystyle i=n+1} to ∞ {displaystyle infty } , then,