Growth

Sales past 3/5Y

Past 3/5-year sales growth rate

💡 What is Sales past 3/5Y? – Measuring the Staying Power of a Company's Growth Engine

"Sales past 3/5Y" means the revenue growth rate over the past 3 to 5 years. It is a growth metric that shows by what average percentage (%) per year a company's revenue has grown over the last 3 or 5 years. Think of it like the rings inside a tree trunk: when the rings stay evenly wide each year, the tree has grown steadily; when they get wider over time, growth is speeding up; when they get narrower, growth is slowing down.

Korean-English Key Terms

This metric matters because revenue growth is the most fundamental source of increases in a company's value. You can temporarily boost EPS (earnings per share) through cost cutting or share buybacks, but true long-term growth starts with rising revenue. Warren Buffett's partner, Charlie Munger, famously said, "In the long run, the stock price converges to the company's revenue growth rate."

The number you see on Finviz is usually shown as a Compound Annual Growth Rate (CAGR). For example, "Sales past 5Y: 15%" means the company's revenue has grown by an average of 15% per year over the past 5 years, which means revenue roughly doubled over that period.

📐 How to Calculate It

The CAGR Formula

Sales CAGR = (Current Revenue / Revenue n years ago)^(1/n) - 1

For example, if NVIDIA (NVDA)'s revenue 5 years ago was $11 billion and its current revenue is $60 billion: CAGR = (60/11)^(1/5) - 1 = about 40.3%. In other words, revenue has grown by roughly 40% per year on average.

Difference Between 3-Year and 5-Year Growth

If the 3-year growth rate is higher than the 5-year rate, growth is accelerating. If it's lower, growth is slowing down. For example, if the 5-year CAGR is 15% but the 3-year CAGR is 25%, that means growth has sped up meaningfully in recent years, which is very positive. On the other hand, if the 5-year CAGR is 20% but the 3-year CAGR is only 8%, the company grew quickly early on but has slowed down recently—a warning sign.

📊 How to Interpret Revenue Growth Rates

High Growth: 20% or more per year

Revenue growth of 20% or more per year is outstanding, far above industry averages. Good examples include NVIDIA (NVDA) riding the AI semiconductor boom, Tesla (TSLA) expanding the EV market, and Amazon (AMZN) with its rapid AWS cloud growth. Companies that sustain this level for 3–5 years or more are very rare and earn high valuation premiums (high PER and PSR) from the market.

Steady Growth: 8%–20% per year

This is a healthy growth level, well above GDP growth. Large blue-chip names like Microsoft (MSFT), Apple (AAPL), and Visa (V) fall in this range. Maintaining this kind of growth on top of an already massive revenue base is evidence of strong competitive advantages and market dominance. This is the most attractive zone for long-term investors.

Low Growth: 0%–8% per year

This is roughly in line with inflation and GDP growth. It's typical for mature giants like Coca-Cola (KO) and Procter & Gamble (PG). Companies in this range tend to return value to shareholders through steady dividends and buybacks rather than through growth. They are less appealing to growth investors but well suited for dividend investors.

Negative Growth: Negative average per year

A 3- to 5-year average revenue decline is a serious warning sign. There's a high chance of structural problems: industry decline, technological disruption, or competitive losses. Intel (INTC) is a prime example, suffering revenue declines as it lost data center market share to AMD and NVDA. Companies with negative growth can be "value traps" no matter how cheap the valuation looks—so be careful.

🔄 Comparison with Similar Metrics

Revenue Growth vs. EPS Growth

Comparing revenue growth with EPS (earnings per share) growth helps you judge the "quality" of growth. When revenue and EPS grow at similar rates, growth is healthy. When EPS grows faster than revenue, profit margins are expanding—which is very positive. But if revenue grows while EPS stalls, it's a warning that costs are rising.

Past Revenue Growth vs. Future Growth Expectations

The past 3–5 year growth rate is "results," while analysts' forward revenue growth expectations are "expectations." The best combination is high past growth combined with high future expectations. If past growth was low but future expectations are suddenly rising, you may have found a turnaround story. If the past looks great but future expectations are slipping, the growth cycle may be coming to an end.

Revenue Growth vs. PEG Ratio

PEG = PER / EPS growth rate, and it shows whether a valuation is reasonable relative to growth. Companies with high revenue growth can still have a low PEG (cheap relative to growth) even with a high PER, making them attractive. A PEG of 1 or below is generally considered undervalued relative to growth, and 2 or above is considered overvalued.

🎯 Practical Strategies

Strategy 1: Find Companies Where Growth Is Accelerating

Look for companies whose 3-year revenue growth rate is higher than their 5-year rate. This means growth is accelerating, and is the most powerful catalyst for share price gains. For example, a company that goes from a 10% 5-year CAGR to a 20% 3-year CAGR may have found a new growth driver. Amazon (AMZN) showed this pattern when AWS started growing in earnest.

Strategy 2: Apply the Rule of 40 (SaaS / Tech Stocks)

Widely used for software and SaaS companies, the Rule of 40 says a company is healthy if revenue growth rate (%) + profit margin (%) is 40 or more. For example, 30% growth + 15% margin = 45, which is solid. Even 50% growth with a -5% margin also gives 45, representing a reasonable level of reinvestment for growth. The logic is: "If you're growing fast, it's okay to be unprofitable; but if you're growing slowly, you need to be profitable."

Strategy 3: Compare Growth Rates Against Competitors

Comparing 3- to 5-year revenue growth among competitors in the same industry reveals shifts in market share. If the whole industry is growing at 10% per year but Company A is at 20% and Company B at 5%, Company A is taking share from B. Companies gaining share are strengthening their competitive edge and tend to outperform the market over the long run.

Strategy 4: Distinguish Organic Growth from Growth by Acquisition

You need to tell whether revenue growth is coming from the company's own business expansion (organic growth) or from mergers and acquisitions (M&A). Organic growth is more sustainable and more valuable. Many companies report "Organic Revenue Growth" separately in their earnings releases—be sure to check that figure.

🏭 Revenue Growth Characteristics by Industry

Technology / SaaS

This is the sector with the highest revenue growth rates. Companies benefiting from secular growth themes like cloud, AI, and cybersecurity post annual revenue growth of 20%–50%. But once growth slows, valuations can reprice sharply, so you need to watch growth-rate trends very closely.

Consumer Staples

Coca-Cola (KO), Procter & Gamble (PG), and peers show low single-digit growth (around 2%–5% per year) but remain stable regardless of the economy. Their key competitive edge is "pricing power"—the ability to lift prices during inflation and grow revenue that way.

Energy

Revenue swings sharply with oil prices. ExxonMobil (XOM)'s revenue surges when oil prices rise and plunges when they fall. When you look at energy company revenue growth, you must always analyze it alongside oil price trends. Since you can't control oil prices, it's better to focus on organic growth driven by production volume increases.

⚠️ Cautionary Notes

1. Past growth ≠ future growth: A company's growth rate naturally slows over time (law of large numbers). Growing at 20% from $1 billion is doable, but growing at 20% from $100 billion is extremely difficult.

2. Don't look at revenue growth alone: No matter how fast revenue grows, the company is at risk if it isn't producing profits. Companies that lose money in pursuit of growth must eventually be able to earn a profit. "Growth for growth's sake" is not sustainable.

3. Strip out M&A effects: A company that does a big acquisition sees a sudden jump in revenue, but that's not the growth of its existing business. You need to check organic revenue growth separately.

4. Currency effects: The foreign revenue of global companies is affected by exchange rates when converted to USD. A strong dollar makes foreign revenue look smaller; a weak dollar makes it look bigger. Also check the "constant currency" growth rate.

5. Base effect: When revenue crashes in a one-off situation like COVID and then recovers, the growth rate can look abnormally high. After the 2020 collapse, the 2021–2022 rebound can inflate the 3-year CAGR.

✅ Checklist

☑ Have I compared the 3-year and 5-year revenue growth rates to see whether growth is accelerating or decelerating?
☑ Are profit margins improving alongside revenue growth?
☑ Have I identified the organic growth rate (excluding M&A effects)?
☑ Have I compared revenue growth against industry peers?
☑ Have I also checked future revenue growth expectations (analyst consensus)?
☑ Have I identified the driver of revenue growth (new products, market expansion, price increases)?
☑ Have I judged the remaining growth runway using current revenue share of TAM?
☑ Have I accounted for base effects and currency effects?

❓ Frequently Asked Questions (FAQ)

Q. Is it okay for a high-revenue-growth company to have a high PER?

A. A high growth rate can justify a high PER, but only up to a point. Check the PEG ratio (PER / growth rate). A PEG of 1 or below means undervalued relative to growth, 1–2 is fair, and 2 or above is overvalued. A company growing revenue at 30% per year with a PER of 60 has a PEG of 2—reasonable. But a company growing at 10% per year with a PER of 60 has a PEG of 6—excessive. The key question is whether the high growth has already been priced in.

Q. When revenue growth slows, does the stock price always drop?

A. Slowing growth often weighs on the stock, but not always. The key is whether the slowdown is worse than what the market already expected. If expectations were already low and PER was already compressed, the actual slowdown may not move the stock much. Also, if profit margins improve sharply at the same time (cost efficiency), the stock can actually rise. Meta (META) is a good example: in 2023 it declared its "year of efficiency," and even though revenue growth slowed, profits improved sharply and the stock surged.

Q. Should I always avoid companies whose revenue is declining?

A. It depends on the reason. If revenue drops because of a divestiture of a non-core business or intentional cleanup of low-margin operations while profit margins improve significantly, that can actually be positive. But if the core business itself is shrinking, that's a serious warning sign. It could mean customers are moving to competitors or the industry is declining. Pinpointing exactly why revenue is falling is what matters most.

Q. Why doesn't Finviz show a "Sales past 5Y" figure for some companies?

A. It may be because the company has been listed for less than 5 years, or the data is incomplete. Companies that have been public for less than 5 years can't have a 5-year growth rate calculated, so only 3-year data is shown. It can also be missing when the corporate structure has changed due to a SPAC merger or a spin-off, leaving no historical data. In those cases, it's a good idea to check Yahoo Finance or SEC filings directly.

🇰🇷 Notes for Korean Investors

The Appeal of Growth Investing: The U.S. market offers types of high-growth companies that don't exist in Korea. Revenue growth rates at firms leading global megatrends—AI, cloud, cybersecurity, EVs, space—are often on a completely different level from Korean companies. Investing in these companies gives Korean investors access to high growth returns that are hard to come by in the Korean market.

Growth vs. Exchange Rates: U.S. company revenue growth is measured in USD, so when the won weakens (rising exchange rate), KRW-converted revenue looks larger, and when the won strengthens, it looks smaller. Over the long run, the effect of revenue growth usually dwarfs currency moves, but in the short term the exchange rate can have a meaningful impact on returns.

Using Finviz: In the Finviz Screener, you can use the "Sales past 5Y" filter to easily find companies with revenue growth in your target range. A combo like "Sales past 5Y over 15%" + "Market Cap Large" + "ROE over 15%" is a good way to find large-cap names with steady growth and strong profitability.

Peter Lynch's Lesson: Legendary investor Peter Lynch said, "Invest in companies growing revenue 20%–25% per year, and actually be cautious of companies growing 40% or more." Growth that is too fast may be unsustainable, and steady growth at a reasonable pace tends to build greater wealth over the long run.