The long-term projected earnings growth rate for a stock is the average of the available third-party analysts’ estimates for three- to five-year EPS growth.
For portfolios, this data point is the share-weighted average of the projected earnings growth estimates for all the stocks in the portfolio. (The share-weighted average is more accurate than an asset-weighted average for this type of calculation.)
Note: Long-term projected earnings growth is one of the five growth factors used to calculate the Morningstar Investment Style Box.
Benefits
Investors and institutions trade stocks based on their expectations for how stocks will perform in the future. The long-term projected earnings growth rate summarizes stock analysts’ estimates for how quickly a company will grow its earnings per share. This measure helps Morningstar determine how strong the overall growth-orientation is for a stock or portfolio.
Origin
Morningstar generates this figure in-house based on stock statistics from our internal equities databases. For stocks, this figure is calculated monthly. For funds and portfolios, Morningstar updates this figure upon receipt of the most-recent portfolio holdings from the asset manager.