Definition:

The 10-year Revenue Growth Rate measures the compound annual growth rate (CAGR) of a company's revenue over a ten-year period. It provides insight into the company's long-term revenue growth trend.

Formula:

CAGR = (Ending Revenue / Beginning Revenue)^(1/10) - 1

How to use the metric:

Investors and analysts use the 10-year Revenue Growth Rate to assess a company's ability to grow its revenue over a significant period. It helps in evaluating the company's past performance and potential for future growth, making it a useful metric for long-term investment decisions.

Limitations:

The 10-year Revenue Growth Rate does not account for external factors such as economic downturns or industry changes that might have impacted revenue growth. It also does not consider profitability, cash flow, or other financial health indicators. Additionally, it may not be as relevant for newer companies with less than ten years of operational history.

Applies to:

This metric works best in industries with stable and predictable revenue streams, such as consumer goods, utilities, and established technology companies, where long-term growth trends are more indicative of future performance.

Doesn't apply to:

It may not apply well to industries characterized by rapid change or high volatility, such as startups, biotechnology, or industries heavily influenced by technological disruption, as these sectors may experience significant fluctuations in revenue growth rates.

Summary:

The 10-year Revenue Growth Rate is a valuable metric for assessing a company's long-term revenue growth trend. While it provides insights into past performance and potential future growth, it should be used in conjunction with other financial metrics to get a comprehensive view of a company's financial health. It is most applicable to stable industries and less relevant for sectors experiencing rapid change or volatility.