Net income growth

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The Economic Times  6 hrs ago  Comment 
'We have been recommending it. If you see the business model for Atul, in terms of earnings, they have been growing consistently.'
The Economic Times  Aug 12  Comment 
The market will look up for the Q2 numbers till the time it does not form an opinion about earning FY15 and FY16, says Rakesh Tarway.
SeekingAlpha  Aug 8  Comment 
By Michael Allison: Avigilon's (OTC:AIOCF) (AVO) 2nd quarter results, released on August 7th, shows that the leadership team continues to execute very well on its stated goal of achieving $500 million in revenues by 2016. Following are some of...
Forbes  Aug 6  Comment 
Not even a 10% earnings jump could save Time Warner from the Game of Thrones style blood bath Rupert Murdoch set into motion Tuesday.
The Globe and Mail  Aug 5  Comment 
Corporate earnings come with a wrinkle
Forbes  Aug 4  Comment 
More importantly, production growth came primarily from liquids, which are priced higher than natural gas that led to a positive volume-mix effect. In addition, higher benchmark commodity prices also led to an increase of around $3.35 or almost 5%...
The Economic Times  Jul 31  Comment 
Although growth in key financial parameters like revenue and profit would be moderate as average discount level continues to remain elevated.
newratings.com  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...




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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.

Examples

  • 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
Q1$100m$104m$144m
Q2$120m$142m$120m
Q3$130m$140m
Q4$140m$170m

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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