5-Year EPS Growth Filter: Finding Stocks Where Earnings Are Rising

What is 5-Year EPS Growth?

EPS Growth = (Current EPS − EPS 5 years ago) ÷ EPS 5 years ago × 100 (annualised)

EPS growth measures how fast a company's earnings per share are growing. It captures both profit growth and share buybacks — if the company earns more but also reduces the share count, EPS grows faster than net income.

Why EPS growth is the wheel trader's north star

Option premiums are ultimately driven by the market's perception of the stock's future value. A company growing EPS at 15% per year is worth more every year — which means:

• Dips are buying opportunities (the business improves over time).
• Share price recovers faster after drawdowns.
• You collect dividends and capital gains while waiting on assigned shares.

Recommended minimums

Using the filter

1. Open the Stock Screener.
2. Find 5Y EPS % in the Growth section.
3. Set minimum to 8% for a quality-growth screen.
4. Add ROE minimum 12% and Net Margin minimum 8% to confirm the earnings are high-quality.

Buybacks vs. organic growth

EPS can rise because net income grows or because the share count shrinks (buybacks). Both are positive — buybacks signal management confidence. The screener's 5Y Revenue Growth filter helps you distinguish organic growth from pure financial engineering.

Common mistakes

1. Ignoring the starting point. A company that earned $0.01 per share five years ago and earns $0.05 now shows 400% EPS growth. That's impressive, but it's tiny in absolute terms. Combine with a Market Cap filter.

2. Chasing high EPS growth without profitability checks. Some companies show high EPS growth after a one-time tax windfall or asset sale. Use the 5Y net margin filter alongside EPS growth to confirm the underlying business is improving.