Definition:

1-year EPS Growth Rate Without NRI refers to the percentage change in a company's earnings per share (EPS) over a one-year period, excluding non-recurring items (NRI). Non-recurring items are unusual or infrequent gains or losses that are not expected to occur regularly.

Formula:

((EPS at End of Year - EPS at Start of Year) / EPS at Start of Year) * 100

How to use the metric:

This metric is used to assess a company's profitability growth over a year, providing insights into its operational performance by excluding irregular items that could skew results. Investors and analysts use it to evaluate the company's core earnings growth and compare it with peers or industry benchmarks.

Limitations:

The metric does not account for changes in the number of shares outstanding, which can affect EPS. It also excludes non-recurring items, which might be significant for some companies, potentially overlooking important financial events. Additionally, it focuses only on past performance and may not accurately predict future growth.

Applies to:

This metric is applicable across various industries, especially those with relatively stable earnings and fewer non-recurring items, such as consumer goods, utilities, and healthcare.

Doesn't apply to:

Industries with frequent non-recurring items or volatile earnings, such as technology startups or industries undergoing significant restructuring, may find this metric less useful. In such cases, non-recurring items can be a regular part of business operations, and excluding them might not provide a complete picture.

Summary:

The 1-year EPS Growth Rate Without NRI is a useful metric for evaluating a company's core earnings growth by excluding irregular financial events. While it offers a clearer view of operational performance, it has limitations, particularly in industries with frequent non-recurring items or significant changes in share structure.