Net income growth

The Economic Times  41 min ago  Comment 
Earnings have been flat over the first half of this fiscal year, and the US brokerage expects the earnings downgrade cycle to continue for another quarter or two.
The Economic Times  Nov 10  Comment 
Britain's Vodafone reported a better-than-expected acceleration in revenue growth in the second quarter, helping it return to earnings growth.
Motley Fool  Nov 7  Comment 
The supplier of RV and manufactured home components cited strong conditions in its core markets for the revenue surge.
Motley Fool  Nov 1  Comment 
New name, but this healthcare REIT delivers the same healthy results.
Motley Fool  Nov 1  Comment 
The paint specialist saw particularly good conditions in its stores and consumer segment.
The Hindu Business Line  Oct 27  Comment 
That will determine how much investment it draws, says Binay Chandgothia of Principal Global
Motley Fool  Oct 25  Comment 
The medical waste disposal specialist was hit again by foreign currencies.
Motley Fool  Oct 24  Comment 
The rail products and services provider also affirmed its full-year earnings guidance.


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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