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. Long-term projected earnings growth is one of the five growth factors used to calculate the Morningstar Style Box. 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.)
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.
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.