Growth metrics explained
Places the historical development of revenue and earnings using several growth metrics. Both the level and the consistency of that development are taken into account. The score describes historical company data and is not a forecast of future growth.
What does revenue growth show?
Average annual change in revenue over the last three fiscal years (CAGR). It describes how revenue developed in the past and is not a growth forecast. When the reporting history does not cover three years, shortly after an IPO for instance, we show and score the rate over the last two fiscal years. When revenue in the base year was below the equivalent of USD 10 million or no rate can be formed, we show and score “Revenue Development” instead of the growth rate: the change in revenue over three or two years as a percentage of end-year revenue. It is not an annual growth rate. When revenue in the latest fiscal year is already below the equivalent of USD 10 million, we do not rate the metric and show “–”; the financial figures stay visible. We convert to USD at period-average rates derived from the ECB’s euro reference rates (source: ECB).
What does earnings growth show?
Average annual change in net income over the last three fiscal years (CAGR). One-off effects and low base periods can move individual years considerably. If earnings in the base year were not positive, or the most recent year was a loss, a growth rate is not meaningful and is not shown.
What does free cash flow growth show?
Average annual change in free cash flow over the last three fiscal years (CAGR). It complements earnings-based growth figures with the development of a cash-based result. If free cash flow in the base year was not positive, or is negative in the most recent year, a growth rate is not meaningful and is not shown.
What does the change in net margin show?
Change in net margin against the level three years ago, in percentage points. The margin uses consolidated net income, including the share of non-controlling interests, because revenue covers the whole group as well. Unlike a growth rate it is defined even when the company was loss-making back then, and it says whether more or less of each unit of revenue is kept. When the reporting history does not cover three years we show and score the change against the level two years ago. When no revenue is reported in one of the two years, or revenue in the latest fiscal year is below the equivalent of USD 10 million (revenue growth then shows “–”), we show and score “Earnings Development” over the last two fiscal years instead: the difference between the two years divided by the sum of their magnitudes, between −100 % and +100 %. It is not a growth rate. When revenue in the start year was below the equivalent of USD 10 million, we count it as the equivalent of USD 10 million for the margin change. This limits the influence of very small revenue bases. The published financial figures stay unchanged.
What does the change in free cash flow margin show?
Change in free cash flow margin against the level three years ago, in percentage points. Revenue and free cash flow are taken from the same reporting period and the same reporting currency at each endpoint. When the reporting history does not cover three years we show and score the change against the level two years ago. When no revenue is reported, or revenue in the latest fiscal year is below the equivalent of USD 10 million (revenue growth then shows “–”), we show and score “Free Cash Flow Development” instead, and without reported capital expenditure “Operating Cash Flow Development”: each over the last two fiscal years, the difference between the two years divided by the sum of their magnitudes, between −100 % and +100 %. Neither is a growth rate; operating cash flow does not include capital expenditure. When revenue in the start year was below the equivalent of USD 10 million, we count it as the equivalent of USD 10 million for the change in free cash flow margin. This limits the influence of very small revenue bases. The published financial figures stay unchanged.
What does earnings-per-share growth show?
Average annual change in diluted earnings per share over the last three fiscal years (CAGR). Unlike total earnings, it also reflects changes in the share count — from buybacks or share issues, for instance. When earnings per share were not positive in the base year, or the reporting history is too short, no growth rate is defined.
What does growth consistency mean?
Share of year-on-year comparisons in which revenue rose from the prior year. It draws on the annual reports of up to the last 15 fiscal years. Only directly consecutive fiscal years are compared; we show a value only once at least two year-on-year comparisons can be evaluated. A higher value means a steadier past development within this metric — not a forecast of future growth.
How the metrics become a score
How a metric is placed within its comparison group, and how the area scores and the metrics score are formed from it, is described in the methodology.