Net income growth

RECENT NEWS  Jul 23  Comment 
PURCHASE (dpa-AFX) - Beverages giant PepsiCo, Inc. (PEP) reported Wednesday a decline in second-quarter profit on charges. Core earnings per share beat analysts' estimates. Revenues edged up, and beat their view. Further, the company lifted...
Clusterstock  Jul 21  Comment 
Earnings season is under way, and one theme is clear: fat profit margins are driving earnings growth. "[T]he majority of earnings growth we have observed so far this quarter has been a function of margins, as companies continue to operate with...
The Economic Times  Jul 21  Comment 
'Accordingly, you can look at the market two years down the line - may be about 35 per cent higher from where we are.'
SeekingAlpha  Jul 20  Comment 
By Jeff Miller: To the surprise of many observers, stocks have survived a series of recent challenges. As Q214 earnings reports starts begin, the questions has changed: Can strong corporate earnings spark a renewed rally in stocks? ...
SeekingAlpha  Jul 11  Comment 
By Kapitall: Even if you aren't taking a cool trip this summer, now is the time to take a closer look at travel and tourism stocks. International tourism is on the rise yet again, and the United Nations World Tourism Organization (UNWTO) expects...
Commodity Online  Jul 2  Comment 
Bank J.Safra Sarasin in a global report pointed out that if global growth rates continue to accelerate as expected, equity prices could overshoot, at least temporarily.  Jun 26  Comment 
Ahlers reports strong revenue and earnings growth for H1 2013/14. Decision to continue the Gin Tonic brand while closing the Sindelfingen branch. The resulting restructuring expenses will weigh on the bottom line in 2013/14. Ahlers AG / Key...
Wall Street Journal  Jun 16  Comment 
Amira Nature Foods, a Dubai-based Basmati rice company, posted strong sales and earnings growth in its fiscal fourth quarter, and projected that fiscal 2015 revenue and adjusted Ebitda would rise more than 20%.
SeekingAlpha  Jun 3  Comment 
By John Overstreet: Every reliable historical indicator that I have been studying for the last eighteen months suggests that this market (SPY,DIA,QQQ) continues to be biased to the upside. In this article, I am going to argue that the history of...
The Economic Times  Jun 2  Comment 
Analysts are bullish about this stock because its aggressive expansion plans are expected to result in high growth.


Net income growth is the annualized rate of growth over the previous year's net income

Net income growth is the percentage gain (or loss) in net income over time. It is a good indicator of the rate at which companies have grown profits . Stocks with higher net income growth rates are typically more desirable than those with lower net income growth rates.

Investors are particularly enamored by companies with net income growth in the double digits, or greater than 10% growth, and equally important are those companies that have accelerating earnings growth. More mature firms will have lower, more constant levels of growth and typically compensate investors with greater dividends instead of a high growth rate.

When calculating net income growth for multi-year periods, net income growth is usually compounded.


  • Company XYZ earned $-1 million in 2007. In 2008, they earned $1.35 million. Company XYZ has 35% net income growth. (.35 / 1)

Net Income Growth Calculation on Wikinvest

Wikinvest calculates net income growth as the growth of trailing twelve months of net income. The treatment is different from Yahoo! Finance which calculates quarterly year-over-year growth. The following example will illustrate the difference:

' 2006 2007 2008

Q2 2008 is the most recent quarter. In this case, Yahoo! Finance would calculate net income growth as -15.5% [(120-142)/142].

Wikinvest, on the other hand would calculate the growth as 11.2%. This is because wikinvest calculates the growth based on the net income generated in the last twelve months. In this case, Q3 07, Q4 07, Q1 08 and Q2 08. Specially, it is calculated as:

Net Income growth = ((120+144+170+140)-(142+104+140+130))/(142+104+140+130) = 11.2%

Taking the growth based on trailing twelve months of net income mitigates undue fluctuations that affect a single quarter.

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