Revenue Growth

RECENT NEWS
The Hindu Business Line  4 hrs ago  Comment 
IDBI CapitalBlue Dart (Sell)CMP: ₹5,100.45Target: ₹3,736Blue Dart Express reported revenue growth of around 23 per cent y-o-y, better than our estimate. Adjusted...
Wall Street Journal  7 hrs ago  Comment 
VF said its third-quarter earnings climbed 8.5%, driven by revenue growth in the outdoor and action sports segment, as well as the international and direct-to-consumer businesses.
Forbes  7 hrs ago  Comment 
In the last couple of years, the Mexican cuisine specialist has had a tremendous run, due to increasing customer traffic in the fast-casual segment. As a result, the company has been witnessing strong comparable store sales growth and accelerating...
SeekingAlpha  12 hrs ago  Comment 
By Brian Gilmartin, CFA: It has long been known that IBM's (NYSE:IBM) business model or modus operandi was to maintain dominant positions in legacy technology products, make acquisitions that are integrated to help drive cash-flow and...
SeekingAlpha  Oct 17  Comment 
By Integrator: eBay (NASDAQ:EBAY) reported what was a fairly poor Q3. Gross revenue increased only 11.8% year over year, which missed most analyst estimates. Earnings per share of $0.68 were also reported, which was slightly better than analyst...
Forbes  Oct 17  Comment 
In this earnings announcement, we believe that company will continue to report little or no improvement in revenue growth. However, we continue to closely monitor the search and display ads divisions for growth in revenues, especially from the...
SeekingAlpha  Oct 17  Comment 
By Apus Investments: Ahead of Consensus Domino's Pizza (NYSE:DPZ) shares shot up over 11% on the release of their Q3 results. Domino's reported revenue of $447 million and diluted EPS of $0.63 compared to analysts' expectations of $434...
Wall Street Journal  Oct 16  Comment 
Schlumberger Ltd. said its third-quarter earnings rose 14% as the oil-field services company reported revenue growth led by its North American operations.
The Economic Times  Oct 15  Comment 
The street is counting on India's top IT exporter to report a quarter of strong revenue growth on Thursday, as the company continues to cement its position as the industry bellwether.
Wall Street Journal  Oct 14  Comment 
Time Warner CEO Jeff Bewkes will try to make the case to investors that the company is better off independent, and that he can drive revenue growth by plowing savings from personnel cuts into content production.




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Revenue Growth is the percent increase (or decrease) in a company's revenue between two or more equivalent fiscal periods

Revenue Growth is used to measure how fast a company's business is expanding. The figure shows the annual rate of increase/decrease in a company's revenue or sales growth. The figures give analysts, investors and participants an idea of how much a company's sales are increasing over time.

While revenue growth tends to fluctuate from fiscal year to fiscal year and fiscal quarter to fiscal quarter, investors look for trends in revenue growth as a means of gauging the company's growth over proscribed periods of time. All other things being equal, a company that is able to continually grow its revenue should see equivalent increases in net income.

Rate of Revenue Growth

Taking the derivative of the revenue growth gives you the rate of revenue growth, which tells you how much the rate of revenue growth is changing. Investors look at this figure to gauge a potential forthcoming change in earnings growth. If a company that has been able to consistently grow its revenues at some pace begins to see smaller revenue growth over one or more fiscal periods, it may be an indicator that the growth itself will continue to decrease over time, or that it has plateaued.

Example

Company ABC generated $100 billion in revenue during its third quarter of 2005 and $120 billion in the fourth quarter that year, the company saw quarterly revenue growth of 20% sequentially.

If Company ABC generated $150 billion in the fourth quarter of 2004, the company would have seen its revenue increase 50% on a year-over-year basis

Revenue Growth Calculation on Wikinvest

Wikinvest calculates revenue growth as the growth of trailing twelve months of revenue. 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 revenue 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 revenue generated in the last twelve months. In this case, Q3 07, Q4 07, Q1 08 and Q2 08. Specially, it is calculated as:

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

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

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