EPS Growth Calculator — Earnings Per Share CAGR & PEG Ratio
Calculate how fast a company's earnings per share (EPS) have grown, expressed as a compound annual growth rate (CAGR). Enter the base and current EPS and the number of years, and optionally the stock price to get the P/E and PEG ratios for valuation context.
Compound annual growth rate of earnings per share
- 1
EPS ratio (current ÷ base)
3.75 ÷ 2.5 = 1.5 - 2
Annualisation exponent
1 ÷ 3 = 0.333333 - 3
Annual growth factor
1.5^(1 ÷ 3) = 1.144714Raise the total ratio to the power of 1/n to get the per-year multiplier. - 4
EPS CAGR
1.144714 − 1 = 14.47 %
How does this calculator work?
EPS CAGR = (Current EPS / Base EPS)^(1/n) − 1. Enter base and current EPS plus the number of years to get the annualised growth rate, total period growth, P/E ratio (needs stock price), and PEG ratio (P/E ÷ CAGR%). A PEG below 1 is traditionally considered fair/undervalued; above 2 is rich.
Formula
How this is calculated
Earnings per share (EPS) is net profit attributable to shareholders divided by the weighted average number of diluted shares outstanding. EPS growth is the rate at which a company's per-share earnings change over time and is one of the most widely watched fundamental metrics in equity analysis.
For a single-year comparison, simple growth = (Current EPS − Base EPS) / |Base EPS| × 100%. For multi-year periods, the compound annual growth rate (CAGR) is preferable: CAGR = (Current/Base)^(1/n) − 1, where n is the number of years. CAGR smooths out year-to-year volatility and gives a single, comparable annualised rate. Note that CAGR is undefined when the ratio Current/Base is negative (i.e., when EPS crosses from negative to positive or vice versa); in such cases the calculator shows the total period growth instead.
The P/E ratio (price divided by current EPS) captures the market's valuation multiple. The PEG ratio (P/E ÷ CAGR in percent) adjusts for growth: a PEG of 1 is a traditional benchmark for fair value (Peter Lynch), below 1 may indicate undervaluation relative to growth, and above 2 is often considered expensive. These are heuristics, not definitive valuations — they should always be read alongside sector P/E norms, earnings quality, and forward guidance.
Frequently asked questions
Simple percentage growth compares only two endpoints and can be distorted by an unusually high or low base year. CAGR normalises to a per-year rate, making it comparable across companies with different measurement periods. For example, 50% total EPS growth over 5 years equals a 8.45% CAGR per year.
A PEG ratio below 1 is often considered undervalued relative to growth (popularised by Peter Lynch), while above 2 may be considered expensive. However, the PEG ratio is a rough heuristic: it does not account for earnings quality, sector differences, interest rates, or the sustainability of the growth rate. Use it alongside other valuation metrics.
CAGR requires taking a fractional power of the ratio (Current/Base). When the base is negative and current is positive (or vice versa), the ratio is negative, and raising a negative number to a non-integer power is not defined in real numbers. In this case the calculator shows the total growth percentage instead.
Also known as
TG we-Calculate Editorial Team. (2026). EPS Growth Calculator — Earnings Per Share CAGR & PEG Ratio [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/eps-growth-calculator
TG we-Calculate Editorial Team. "EPS Growth Calculator — Earnings Per Share CAGR & PEG Ratio." TG we-Calculate. 2026. https://we-calculate.com/calculator/eps-growth-calculator.
TG we-Calculate Editorial Team, "EPS Growth Calculator — Earnings Per Share CAGR & PEG Ratio," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/eps-growth-calculator
@misc{wecalculate_eps_growth_calculator, title = {EPS Growth Calculator — Earnings Per Share CAGR & PEG Ratio}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/eps-growth-calculator}}, year = {2026}, note = {TG we-Calculate} }
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