The Growth Rank

The Stockopedia Growth Rank is based on a blended composite of forecast and historic growth rates. Our approach mirrors that taken for our ValueRank, Quality Rank and MomentumRank scores. It is inspired by the writings of famous growth investors such as T. Rowe Price, Philip Fisher and Jim Slater. It also mirrors related work on Style Indices from Refinitiv, S&P and Morningstar.

Important caveat!

Of all investing approaches, growth stock investing is perhaps the least amenable to quantitative analysis. Growth investors must identify companies that are still in the early to middle stages of their growth cycles and have some strategic advantage that enables them to stay well ahead of the competition, and just focusing on the fastest growing companies is unlikely to be enough. Companies with high growth rates generally suffer from the phenomenon of 'reversion to the mean'.

Another related problem with seeking out high growth companies is that they tend to carry both high investor expectations and high valuations, which make growth stocks sensitive to disappointments. In light of this, the GrowthRank is likely to be of most value in combination with other screening criteria that control for valuation such as the ValueRank, i.e. a growth at a reasonable price (GARP) type screen.

How do you calculate the Growth Rank?

Our GrowthRank is based on a composite of the following Growth Factors which weight recent historic growth trends with consensus forecast growth rates from brokers:

Forecast Growth Rates

  1. Long Term Consensus Broker EPS Growth Forecast %
  2. EPS Growth Forecast % on a rolling 1 year basis

Historic Growth Rates

  1. EPS 3 yr compound annual growth rate %
  2. Sales 3 yr compound annual growth rate %
  3. Sustainable Growth Rate % (also known as the current Internal Growth Rate - this is calculated by multiplying the Return on Equity by the Earnings Retention rate).

Each company in the market is ranked from 1 to 100 for each of these growth ratios and a composite score is calculated as the weighted average of all valid values. The GrowthRank™ is then calculated between zero and 100 for this composite score, where 100 is best and zero is worst.

A subscription to Stockopedia will be one of the best investments you'll ever make...

Here's what you'll get:
A decade of research into what works in stock markets
Millions of pounds of platform investment
Countless hours of research time saved
Access to hundreds of educational articles and ebooks
Over 30 talented professionals working flat out for you
A team of the very best bloggers acting as mentors
Saving you thousands in advisory fees every year
Stockopedia is the perfect solution for the time-poor individual investor looking for results
Starting at just £295 per year

After your free trial, plans start at just £295 per year. With a one month money back guarantee, there's no risk.

© Stockopedia 2024, Refinitiv, Share Data Services.

*Past performance is no indicator of future performance. Performance returns are based on hypothetical scenarios and do not represent an actual investment.

This site cannot substitute for professional investment advice or independent factual verification. To use Stockopedia, you must accept our Terms of Use, Privacy and Disclaimer & FSG. All services are provided by Stockopedia Ltd, United Kingdom (company number 06367267). For Australian users: Stockopedia Ltd, ABN 39 757 874 670 is a Corporate Authorised Representative of Daylight Financial Group Pty Ltd ABN 77 633 984 773, AFSL 521404.