Net income growth measures the percentage change in a company's trailing twelve-month bottom-line profit compared to [1 year / 3 years / 5 years] ago. It reflects changes in revenue, costs, interest, taxes, and all other items that affect the final profit figure. Net income growth is inherently more volatile than revenue growth because it amplifies the effect of fixed costs — a 10% revenue increase can produce a 30% net income increase if margins expand.
Net Income Growth [1Y] = (Net Income TTM current / Net Income TTM 1 year ago) − 1 Net Income Growth [3Y] = (Net Income TTM current / Net Income TTM 3 years ago) − 1 Net Income Growth [5Y] = (Net Income TTM current / Net Income TTM 5 years ago) − 1
GeminIQ uses TTM net income compared to the same TTM period [1/3/5] years prior, from SEC filings. Growth is not calculated when the prior period's net income was zero or negative, as the percentage change would be meaningless.
A: Operating leverage amplifies bottom-line changes. A company with 50% fixed costs will see a 10% revenue increase translate into roughly a 20% net income increase (and vice versa for declines). One-time items like tax charges, impairments, or legal settlements add further volatility.
A: Net income growth should generally keep pace with or exceed revenue growth for mature companies. If net income is growing slower than revenue, margins are compressing. If faster, margins are expanding. Growth rates above 15% annually are strong for established companies.
A: Net income definitions can vary — some platforms use income from continuing operations, others use total net income. Any difference in the base figure changes the growth rate. GeminIQ uses total Net Income as reported in the filing.