Equity Growth Rate Calculator
Measure how quickly a company is growing its Equity or Book Value Per Share.
This calculator determines the rate a company can increase its equity over a specific time period.
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Equity (BVPS) Growth Rate
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Formula
What is Equity Growth Rate?
Equity Growth Rate, also known as Book Value Per Share (BVPS) growth, measures how quickly a company is accumulating shareholder value. It's one of the Big 5 numbers that indicate whether a business has a durable competitive advantage.
Rule #1 Guideline
Look for companies with equity growth of 10% or higher consistently over the past 10 years. Growing equity means the company is building real value for shareholders.
Understanding Book Value Per Share
Book Value Per Share (BVPS) represents the net asset value of a company on a per-share basis. It's calculated by taking total equity and dividing by the number of outstanding shares.
Why Equity Growth Matters
- • Wealth Creation: Growing equity means the company is building real value, not just revenue.
- • Retained Earnings: Shows the company is profitably reinvesting in itself.
- • Intrinsic Value: Book value growth contributes to increasing the true value of the business.
Where to Find BVPS Data
Book Value Per Share can be found on financial websites like Morningstar, Yahoo Finance, or calculated from the balance sheet by dividing Total Shareholders' Equity by Shares Outstanding.
Common Questions About Growth Rate Calculation
What if the equity growth rate is negative?
That's a red flag. It could mean the company is losing value. It could be for any number of reasons, such as decreasing earnings, increasing debt, or even money owed that's not being paid down. They might also be having problems with their operations or additional investments. It's normal to feel concerned if you see a negative growth rate. Use it as a cue to dig deeper.
What's the difference between the equity growth rate and rate of return?
While both measure growth, the equity growth rate focuses on the company's value, while the rate of return looks at your investment performance, including dividends and price changes. The formula for equity growth rate is based on the change in book value per share, while rate of return includes things like stock dividends and capital gains.
Can I use this calculator for quarterly or annual values?
Absolutely! Just make sure you're comparing values from the same accounting period. That might be an annual rate, quarterly, or another specified period.
Next Steps
You can move on to the Operating Cash Flow Growth Rate Calculator to finish determining if this business is right for you.
Operating Cash Flow Growth Rate
This determines how quickly a company's operating cash flow grows over time.
Calculate Operating Cash Flow Growth Rate →
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