Retained earnings growth measures the percentage change in a company's accumulated retained earnings over the past year. Retained earnings represent the cumulative net income a company has earned over its entire history, minus all dividends paid to shareholders. Growth in retained earnings indicates the company is adding to its internal equity base through profitable operations.
Retained Earnings Growth = (Retained Earnings current / Retained Earnings 1 year ago) − 1
GeminIQ compares current retained earnings to the same quarter one year ago, from the balance sheet as filed.
A: Positive growth means the company's cumulative profitability is increasing — it earned more in the past year than it paid out in dividends. Declining retained earnings can indicate losses or dividend payments exceeding earnings. For companies with negative retained earnings (accumulated deficit), growth means the deficit is shrinking.
A: Aggressive share buyback programs can reduce retained earnings below zero by increasing the treasury stock balance. Apple, for example, has had negative retained earnings in recent years not because it was unprofitable but because its buyback program was larger than its cumulative earnings.
A: Differences stem from how the retained earnings figure is sourced. GeminIQ uses the Retained Earnings Accumulated Deficit line directly from the filing.