Definition:

The 10-year Operating Income per Share Growth Rate measures the annualized growth rate of a company's operating income per share over a ten-year period. It provides insight into how effectively a company has been able to increase its operating income on a per-share basis over a decade.

Formula:

((Operating Income per Share at End of Period / Operating Income per Share at Start of Period) ^ (1/10)) - 1

How to use the metric:

Investors and analysts use this metric to assess a company's long-term operational performance and its ability to grow earnings from its core business operations. A consistent growth rate can indicate a strong competitive position and effective management.

Limitations:

The metric does not account for short-term fluctuations or recent changes in business conditions. It may also be skewed by one-time events or accounting changes. Additionally, it does not consider external factors such as economic cycles or industry-specific challenges.

Applies to:

This metric is particularly useful in stable and mature industries where long-term growth trends are more predictable, such as consumer goods, utilities, and healthcare.

Doesn't apply to:

It may not be as relevant for industries characterized by rapid change or high volatility, such as technology or startups, where shorter-term metrics might provide more actionable insights.

Summary:

The 10-year Operating Income per Share Growth Rate is a valuable tool for evaluating a company's long-term operational growth. While it offers insights into a company's historical performance, it should be used in conjunction with other metrics to provide a comprehensive view of a company's financial health and future prospects.