REFS is
a mine of invaluable information for the private investor.
Selecting shares without its help is like trying to
clap with one hand tied behind your back.
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Calculating
the growth rate for the latest reported period
When
earnings forecasts are not available, the ‘(pr)’ suffix does
not appear, and the growth rate refers solely to the rate of
increase in historic normalised EPS for the latest reported
period. The calculation of growth rate for a given period is
as follows:
Step 1:
(EPS
FOR PERIOD) - (PREVIOUS EPS)
= EPS CHANGE
(+ OR -)
Step 2:
EPS
CHANGE
-----------------
X 100 = EPS GROWTH (%)
PREVIOUS
EPS
To illustrate,
the following example shows the calculation of historic earnings
growth, measured at 31st January 1997. The Company’s last reported
year end is 31st March 1996, and earnings forecasts for the
next period are not available. The historic growth rate works
out at +17.8%:
Step 1:
Calculate the EPS change, as follows:
EPS CHANGE
= (18.5p - 15.7p) = 2.8p
Step 2:
Calculate Historic EPS growth, as follows:
2.8p
GROWTH =
------- X 100 = + 17.8 %
15.7p
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