5Y Net Income Growth (CAGR)
Five-year net income growth tells an investor how fast the profit available to shareholders has compounded each year over the past five fiscal years.
How it is calculated
(Net Income Allotted to Shareholders ÷ Net Income Allotted to Shareholders 5 fiscal years earlier)^(1/5) − 1
Shown as 0 when both values are negative.
- Unit
- Percent
- Periods
- Annual
- Source
- Calculated by stockrow from the inputs below
- Made from
- Net Income Allotted to Shareholders
Reading 5Y Net Income Growth (CAGR)
How to read it
This is a compound annual growth rate. stockrow divides net income allotted to shareholders in the latest fiscal year by the same figure five fiscal years earlier, raises the result to the power 1/5 and subtracts 1. The answer is the steady yearly rate that would carry the old profit to the new one. It rises when recent profit is higher or the starting year was weak, and falls when recent profit is lower or the starting year was strong. Only the two end points count; the years between do not.
What is typical
Mature businesses in stable industries usually show modest, steady rates, while fast-growing companies can show high ones, and cyclical companies swing widely depending on where in the cycle the two end years fall. Compare the figure with the median for the company’s sector.
Pitfalls
Because only the first and last years matter, a depressed starting year inflates the rate and an unusually good one deflates it, even if the years between tell another story. When profit crosses from a loss to a gain, the rate is hard to interpret. stockrow shows the value as zero when both values are negative, so a zero can mean two loss-making years rather than flat profit. The figure is calculated from annual periods only.