Definition:

5-year EBITDA per Share Growth Rate measures the annualized rate at which a company's EBITDA per share has grown over a five-year period. It provides insight into the company's operational efficiency and profitability growth on a per-share basis over a medium-term horizon.

Formula:

((EBITDA per Share in Year 5 / EBITDA per Share in Year 0) ^ (1/5)) - 1

How to use the metric:

Investors and analysts use this metric to assess a company's growth in operational profitability relative to its share count over a five-year period. A higher growth rate indicates improved operational performance and potentially increasing shareholder value.

Limitations:

This metric does not account for changes in capital structure, one-time events, or variations in accounting practices. It may also be skewed by significant fluctuations in EBITDA or share count over the period.

Applies to:

Industries with relatively stable and predictable cash flows, such as consumer goods, utilities, and healthcare, where EBITDA is a reliable measure of operational performance.

Doesn't apply to:

Highly volatile industries like technology startups or cyclical industries such as mining, where EBITDA can be highly variable and not reflective of long-term trends.

Summary:

The 5-year EBITDA per Share Growth Rate is a useful metric for evaluating a company's operational growth on a per-share basis over a medium-term period. While it provides valuable insights into profitability trends, it should be used in conjunction with other financial metrics to account for its limitations and industry-specific factors.