Earnings Growth

Earnings growth means an increase in a company’s profit over time. In simple terms, earnings growth shows that a company is making more money after costs and expenses. Earnings growth is important because investors often pay higher prices for companies that can grow profits consistently. Strong earnings growth can support stock prices and improve investor confidence. For example, if a company earned $1 billion last year and $1.2 billion this year, its earnings grew by 20%. Earnings growth is not the same as revenue growth. Revenue is sales, while earnings are what remains after costs and expenses are subtracted.