EPS Y/Y TTM

English terms

EPS Y/Y TTM, EPS Annual Growth, YoY EPS Change, Trailing EPS Growth Rate

Korean terms

EPS year-over-year growth rate, annual change rate of EPS, YoY EPS change rate, earnings growth rate

+50% or more -- Explosive growth

EPS is growing by 50% or more compared to the previous year. This happens with innovative products, expanding market dominance, or a turnaround (move into profit). Nvidia (NVDA) recorded an EPS Y/Y TTM over 500% in 2024 thanks to the AI boom. However, this can be an illusion caused by a base effect (when the previous year's results were abnormally low), so the cause should be analyzed.

+10% to +50% -- Healthy growth

This is the growth range most welcomed by the market. It signals sustainable business growth and becomes the strongest driver of stock price gains. Microsoft (MSFT) has maintained a steady EPS growth rate of 10-30% thanks to its cloud and AI businesses, and this is the basis for its long-term stock price climb.

0% to +10% -- Stagnation / Low growth

Earnings growth only keeps pace with inflation, so real growth is minimal. It appears in mature-stage companies or in industries where business conditions are slowing. Traditional companies like Coca-Cola (KO) or Walmart (WMT) move stably in this range and reward shareholders with dividends. In this range, a high valuation (P/E) carries downside risk for the stock price.

Negative -- Earnings decline / swing to loss

It means EPS dropped compared to the previous year, and the cause can be intensified competition, rising costs, or weak business performance. In particular, swinging from profit to loss hits the stock price hard. However, a temporary decline from intentional investment for growth (such as expanding R&D or entering new businesses) can be positive long-term. Always identify the cause.

EPS Y/Y TTM vs EPS Q/Q

EPS Y/Y TTM is the growth rate on an annual basis, while EPS Q/Q shows the change versus the immediately previous quarter. EPS Q/Q is easily affected by seasonality (for example, Q4 is always strong for retail companies) and has a lot of short-term noise. EPS Y/Y TTM compares over 12 months, so it shows the true growth rate with seasonality removed.

EPS Y/Y TTM vs Sales Y/Y TTM

Comparing the revenue (Sales) growth rate with the EPS growth rate shows how a company's profitability is changing. If EPS growth is higher than revenue growth, margins are improving (a good sign); if EPS growth is lower than revenue growth, costs are increasing (a warning sign). Amazon (AMZN) is an example where revenue growth was in the 10% range, but EPS growth reached 70% thanks to cost savings.

EPS Y/Y TTM vs EPS next 5Y

EPS Y/Y TTM is the actual past growth rate, while EPS next 5Y is the future outlook. If past growth was high and future outlook is also high, the growth momentum is continuing. If past growth was high but future outlook is falling, the company may have reached its growth peak.

This is the industry with the largest swings in EPS growth rate. Companies riding new technology trends (AI, cloud, etc.) show explosive growth of +50-500%, while those falling behind suffer sharp declines. The AI boom at Nvidia and the cloud growth at Microsoft are typical examples. When investing in tech stocks, whether EPS growth is accelerating is the key judgment criterion.

EPS growth rate fluctuates greatly with interest rates and the economy. During rate hike cycles, net interest margin expansion enables +20-30% growth, while during recessions, increases in loan-loss provisions can cause sharp drops of -20 to -50%. JPMorgan (JPM) saw strong EPS growth in 2023 thanks to higher rates.

Extremely sensitive to oil/gas prices, energy is one of the industries with the most volatile EPS growth rates. During the 2022 oil price surge, ExxonMobil's (XOM) EPS grew over 100%, only to fall sharply when oil prices dropped in 2023. Energy companies' EPS growth depends more on the commodity cycle than on the company's own capabilities.

EPS growth rate is low (+3-8%) but very stable. Companies like Procter & Gamble (PG) and Coca-Cola (KO) have steady demand regardless of the economy, so EPS growth fluctuates little. During inflationary periods, their pricing power may actually push growth rates higher.

If the previous year's EPS was very low (e.g., $0.10), a small rise this year (e.g., $0.50) makes the growth rate look enormous at +400%. Conversely, if the previous year's EPS was very high (e.g., during an energy boom), this year's normal EPS can produce a strongly negative growth rate. Always check the absolute amount as well.

One-time items such as gains on asset sales, lawsuit settlements, or restructuring costs can distort EPS and, in turn, distort Y/Y comparisons. If there were large restructuring costs last year that kept EPS low, a normal level of EPS this year will show a high growth rate. It is important to distinguish between GAAP and Non-GAAP EPS.

Companies that do large-scale buybacks can grow EPS even when net income is flat. Apple (AAPL) buys back over $80 billion of its own stock each year, steadily reducing the share count. In that case, a positive EPS Y/Y TTM may be the result of financial engineering rather than real business growth, so compare it with the net income growth rate to see whether it is genuine growth.

Q. Does EPS Y/Y TTM of +100% mean EPS doubled?

A. Yes. +100% means it doubled compared to the previous year. +200% means 3x, +300% means 4x. For example, if last year's EPS was $1 and this year's is $3, ($3-$1)/$1 x 100 = +200%, meaning EPS tripled. However, such high growth rates are often caused by a base effect (when last year was abnormally low), so it is important to check the absolute amount as well.

Q. How do you interpret EPS Y/Y TTM for a company that swung from loss to profit?

A. When the company moves from a loss (-EPS) to a profit (+EPS), the calculation may yield a very large positive number, or it may be shown as N/A. In that case, the fact that "it turned from loss to profit" is more important than the growth rate number itself. Moving into profit is a strong signal that the business model has been validated, and it can have a big impact on the stock price. Meta's (META) 2023 turnaround is a good example.

Q. Is EPS growth rate proportional to stock price gains?

A. Over the long term there is a high correlation, but in the short term they are not always proportional. Stock prices are affected by market expectations, interest rates, and investor sentiment as well as actual EPS. Even if EPS grows a lot, the stock may not rise if the market was already expecting it (already priced in). Conversely, if there is a positive surprise that beats expectations, the stock can surge by more than the EPS growth rate would suggest.

Q. Which matters more, EPS growth rate or Revenue (Sales) Y/Y TTM?

A. It depends on the company's growth stage. For early-stage growth companies (such as SaaS firms still in the red), revenue growth rate is far more important. For mature companies, EPS growth rate is more highly valued. The ideal scenario is "top-line (revenue) and bottom-line (net income) growing together." If revenue is flat but EPS still grows, the company is hitting the limits of cost cutting, so sustainability is low.

Korean stocks are also analyzed using the EPS year-over-year growth rate, but there are a few differences from the U.S. First, most Korean companies have a fiscal year of January-December, while U.S. companies vary (for example, Apple's fiscal year ends in September). Second, Non-GAAP EPS is used more often in the U.S., but K-IFRS-based EPS is the standard in Korea. Third, U.S. companies do buybacks on a much larger scale than Korean firms, so the impact on EPS is bigger.

EPS Y/Y TTM is updated every time quarterly results are released. Korean investors should watch for changes in the EPS growth rate of their holdings during earnings season (January, April, July, October). After results are announced, when EPS Y/Y TTM beats market expectations (consensus), the stock often rallies sharply; when it misses, the stock often falls sharply. Check the earnings calendar on USStockToday to prepare in advance.

When Korean investors invest in U.S. growth stocks, it is effective to build a portfolio focused on names where EPS Y/Y TTM is +20% or higher and accelerating. However, since high-growth stocks tend to be volatile, a balanced approach is to allocate 60-70% of the portfolio to stable large-cap growth stocks (MSFT, AAPL) and the remaining 30-40% to aggressive high-growth stocks (such as NVDA).