Growth Metrics

Growth metrics are used to examine a company’s historical growth (and hopefully provide clues for the future). Depending on a company’s current context, different metrics can be used to more accurately capture a company’s historical growth. YCharts offers growth metrics that allow you to investigate quarterly growth (QoQ) and annual growth metrics that range from annual YoY to three, five, and ten year growth.

Each company and industry is different, so deciding what growth metrics paints an accurate picture is critical. Comparing a company’s growth that had a recent exceptional one-time expense with a quarterly metric would be poor due diligence. On the flipside, comparing a company and its competitors across three year growth metrics makes a lot of sense (and could lead to financially savvy decisions).

The complete listing of growth metrics is as follows:

Quarterly Year on Year Growth (YoY):
Useful for cyclical/seasonal companies. Compares a financial line-item with it’s historical number the previous year. i.e. if WMT’s revenues 2012-Q3 were 114.28B and 2013-Q3 numbers were 116.94B, its quarterly growth YoY is 2.3%.

Quarterly on Quarterly Growth (QoQ):
- Useful for non-seasonal companies where line-items are not impacted by seasonality or one-time items.

Annual Year on Year Growth:
- Compares a line-item across one year.

Three Year Growth:
- Compares a line-item three years ago, CAGR.

Five Year Growth:
- Compares a line-item five years ago, CAGR.

Ten Year Growth:
- Compares a line-item ten years ago, CAGR.

For annual metrics such as the three, five, and ten year growth these growth numbers are compound annual growth rate adjusted. For instance, if WMT’s 2013 Revenues is 469B and 2008 is 378B, the entire growth over the five year period is 23%. Because this is across a five year period, the cost adjusted growth is calculated as equivalent to 1.23^(⅕)= 4.38%