Definition:

The 5-year EPS Growth Rate Without NRI measures the compound annual growth rate of a company's earnings per share (EPS) over a five-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:

CAGR = [(EPS at End of Period / EPS at Start of Period)^(1/5)] - 1

How to use the metric:

Investors use this metric to assess a company's ability to grow its earnings consistently over time, providing a clearer picture by excluding one-time events that could skew results. It helps in evaluating the company's operational performance and potential for future growth.

Limitations:

The metric does not account for changes in market conditions or industry dynamics that might affect future growth. It also relies on historical data, which may not be indicative of future performance. Additionally, excluding non-recurring items might overlook significant events that could impact the company's financial health.

Applies to:

This metric is particularly useful in industries with stable and predictable earnings, such as consumer staples, utilities, and healthcare, where companies typically have consistent growth patterns.

Doesn't apply to:

Industries with high volatility and frequent non-recurring items, such as technology and mining, may not benefit from this metric as it might not accurately reflect the company's growth potential due to frequent one-time events.

Summary:

The 5-year EPS Growth Rate Without NRI is a valuable tool for assessing a company's consistent earnings growth by excluding non-recurring items. While useful in stable industries, it may not fully capture growth potential in more volatile sectors.