Revenue growth vs EPS growth: why they diverge and which to trust

Growth is the number most often used to justify a high share price, and it comes in two flavours that regularly disagree. Revenue growth measures how fast a company's sales are expanding. Earnings-per-share growth measures how fast the profit attributable to each share is expanding. When the two move together, the story is simple. When they diverge — and across the companies we cover they diverge a great deal — the gap tells you more than either number does on its own.

How we measure growth

Both rates on our pages are compound annual growth rates over three fiscal years: the latest full year compared with the year three years earlier, expressed as a steady yearly rate. Doubling over three years is about 26% a year, not 33%, because each year's growth builds on the last — that is what "compound" means. Using complete fiscal years, rather than the trailing twelve months, keeps one unusual quarter from distorting the result.

Because fiscal years differ, the window differs too. For most companies we cover it runs from 2022 to 2025; for Nvidia, Microsoft, Micron, Salesforce and Super Micro, whose latest fiscal year ended in 2026, it runs from 2023. Every comparison page states each company's base year.

Sixteen of the companies we cover

A dash means no EPS growth rate could be computed honestly — Micron, for example, lost money in the base year of its window. Palantir, Shopify, Uber and Amazon are in the same position, so they are left out of the table, and their comparison pages show a dash for EPS growth; why we never compute growth across a loss is explained in the numbers we refuse to print.

When earnings outrun sales: operating leverage

Meta grew revenue by 19.89% a year and earnings per share by 39.84%. Alphabet: 12.51% and 33.34%. AMD: 13.64% and 46.66%. When a company's costs grow more slowly than its sales, each extra dollar of revenue carries more profit, and earnings accelerate past revenue. That is operating leverage, and it is one of the most powerful forces in a business with high fixed costs — software, chip design, digital advertising.

It does not last for ever. Margins cannot rise indefinitely, and once they stop rising, earnings growth falls back towards revenue growth. When you see EPS growing much faster than revenue, ask how much further margins can realistically expand — the margin levels themselves are in operating margin by business model.

When earnings lag sales: the squeeze

The opposite pattern is a warning. Tesla's revenue grew 5.19% a year while its earnings per share fell 33.18% a year: the business got bigger and less profitable at the same time, a squeeze that shows up in an operating margin of just 3.35%. General Motors' revenue grew 5.69% a year against EPS falling 18.9% a year.

Qualcomm is a subtler case: revenue barely moved, up 0.06% a year, while EPS fell 23.9% a year. When sales are flat and earnings fall, something between the top line and the bottom line moved against shareholders — costs, taxes, one-off charges or the share count. The annual report explains which; how to read a 10-K shows where to look.

When the base year flatters: Salesforce's 233.65%

Salesforce's EPS grew 233.65% a year over three years, while revenue grew 9.82%. The business did not suddenly become many times better. Its earnings in the 2023 base year were unusually small, so almost any recovery produces an enormous growth rate. Disney's 58.51% has a similar flavour. A growth rate measured from a depressed base is arithmetically correct and practically useless as a forecast — always check what the starting year looked like. You can see Salesforce's figures in context in Microsoft vs Salesforce.

When buybacks do the growing

Apple grew revenue by just 1.81% a year, yet earnings per share grew 6.88% a year. Some of the gap is margin, but much of it is the share count: Apple has spent heavily for years buying back its own shares, so the same profit is divided among fewer of them. EPS growth driven by buybacks is real for shareholders — each share's claim does grow — but it is not the same as a growing business, and it depends on the company continuing to spend cash on repurchases. Compare the two companies' growth in Apple vs Microsoft.

Revenue decline: Pfizer and Intel

Pfizer's revenue fell 14.8% a year, because its 2022 base year included exceptional sales of its COVID-19 vaccine and treatment; earnings per share fell even faster, by 37.12% a year. Intel's revenue fell 5.71% a year, and its earnings growth cannot be computed because it lost money in its latest fiscal year. Falling revenue is the clearest growth signal there is, because it is the hardest number to manage: there is no buyback or margin trick that turns shrinking sales into a growing business.

Which number to trust

Start with revenue growth: it is harder to flatter, never negative in its inputs, and reflects real demand. Then read EPS growth for what happened to profitability and the share count along the way. Treat a large gap between them as a question rather than an answer. Our growth factor averages the two, so a company needs both to win it — and when one is missing, the factor is not scored. The rules are set out in the six-factor score explained.