Past growth rates and managements current investments can give insight into how a company will grow in the future.
Historic growth rates.
- The revenue growth (plot it) section measures the average revenue growth rate for up to five years.
- The profit growth (plot it) section measures the average profit growth rate and
- The EBIT growth (plot it) section measures the average EBIT growth rate for the past five years. EBIT is a more predictable measure of growth because it does not include financing costs and taxes, both of which can vary significantly year to year.
An even better gauge of growth is the adjusted EBIT value (plot it), it excludes one time expenses such as restructuring costs, net affect of accounting changes and other items that can greatly influence revenues but are unpredictably and impossible to guess future values of.
Historic investments and return on those investments.
- Fixed capital investments (plot it), investment in assets such as machinery, buildings vehicles, technology etc, 'fixed' from the point of view that the investment is fixed for more than one year.
- Acquisitions (plot it), investments made by acquiring other companies.
- Net capital investments (plot it), Depreciation is subtracted from capital expenditures to get the net capital expenditures. Large capital expenditures are usually made every few years and are difficult to estimate.
- Total Reinvested ( plot it), includes working capital, fixed capital and acquisition investments with Depreciation deducted.
- Return on capital (plot it), adjusted ROC* (plot it). The return against all capital (equity and debt) employed by the company, measures managements performance for the company as a whole against all stakeholders.
- Return on equity (plot it), adjusted ROE* (plot it). The return against equity only, measures managements performance from the stock holders point of view.
* two adjustments are made,
- operating leases are converted to it's debt equivalent and,
- Research and development is considered an investment in future growth and is therefore converted to a capital expense.
The growth tables below contain growth rates determined through fitted results
using a Least squares model. These results are less affected by large
variations in earnings data and can be more usefull in predicting future
values.