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Earning growth is what investor look in a company. Good growth means increasing stock price. Calculating earning growth is simple. Just compare earning (Net Income) from one period to another period. If a company in year 1 has Net Income of $1,000 and second year is $1,500, it means that the company has earning growth of 50%.
Beware for start-up company, because they usually have high growth, but this growth usually doesn’t stable. Good company will keep growing although they are already mature.
Company with high earning growth is usually priced higher and has higher PE. These companies might be an investment company, or maybe a company that have breakthrough with their product or service, which will rocket their Net Income.
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