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Analysing a stock

Growth: revenue, earnings and dividends

Growth metrics show how fast a company's sales, profit and dividends are increasing - and whether that growth is steady or a one-off.

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Growth metrics show how fast a company's sales, profit per share and dividends increase from year to year. Investors pay more for growth, so whether it continues matters a great deal for the share price.

Revenue growth

Sales growth is the cleanest growth number because it is hard to flatter with accounting choices. Check whether it comes from selling more, raising prices, or buying other companies - growth bought through acquisitions is usually worth less than growth the company creates itself.

Earnings per share growth

Profit per share can grow faster than sales when margins improve or when the company buys back shares. It can also jump because of one-off items, so look at several years rather than a single one.

Consistency

Steady growth over five or ten years tells you more than one spectacular year. Very high growth rates (50 % or more) rarely last; ask what has to happen for them to continue.

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The Growth profile shows companies that are growing fast. It is a learning example, not a recommendation.

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This content is general information, not investment advice.