Definition:

The 10-year Revenue per Share Growth Rate measures the annualized rate at which a company's revenue per share has increased over the past ten years. It provides insight into the company's ability to grow its revenue relative to its share count over a significant period.

Formula:

Revenue per Share Growth Rate = [(Revenue per Share at End of Period / Revenue 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 revenue growth performance. A consistent and high growth rate may indicate a strong competitive position and effective management, making the company potentially attractive for long-term investment.

Limitations:

The metric does not account for changes in the number of shares outstanding, which can affect revenue per share independently of actual revenue growth. It also does not consider profitability, cash flow, or other financial health indicators. Additionally, past growth rates may not necessarily predict future performance.

Applies to:

This metric is particularly useful for industries where revenue growth is a key performance indicator, such as technology, consumer goods, and healthcare, where companies often focus on expanding market share and increasing sales.

Doesn't apply to:

Industries with stable or declining revenue trends, such as utilities or mature industrial sectors, may not find this metric as relevant. These industries often prioritize stability and dividends over aggressive revenue growth.

Summary:

The 10-year Revenue per Share Growth Rate is a valuable metric for evaluating a company's long-term revenue growth relative to its share count. While it provides insights into growth trends, it should be used alongside other financial metrics to gain a comprehensive understanding of a company's financial health and future prospects.