Annualized growth rate = (Sales in last fiscal year Sales from four years
ago) ^ (1 number of years) – 1
Pfizer example: ($58,986 $48,341) ^ (14) – 1 = 0.051 = 5%
To calculate estimated profit-growth rates for this year and next year,
use the equation for quarterly growth above—the one without the exponent
—only this time, put profits for the later period as the numerator and
profits from the earlier period as the denominator. Since the estimated
growth rates only span a single year, you don’t need to annualize.
Estimated profit growth rate = (Profits for later period / Profits for
earlier period) – 1
Pfizer’s estimated current-year per-share-profit growth: ($2.21 /
$2.19) – 1 = 0.010 = 1%
Pfizer’s estimated next-year per-share-profit growth: ($2.31 / $2.21) –
1 = 0.044 = 4%
That leaves just one growth number—the five-year profit-growth
estimate. This one requires the least work of all; you already collected it
from Yahoo! or MSN, and no calculations are necessary.
Equation For Calculating Income.
