Formula
Revenue growth = (this year's sales − last year's sales) ÷ last year's sales × 100 (%)
If sales were KRW 100 billion last year and KRW 115 billion this year, revenue growth is +15%.
Definition
Revenue growth compares sales in the current period with sales in the same period a year earlier and shows as a percentage how much they rose or fell. Revenue growth of 15% means sales grew 15% over the year.
Sales are the first number in the chain, showing how much business a company does in its market. However important profit is, it is hard to grow profit for long unless the volume of sales itself keeps growing. That makes revenue growth the basic growth metric for seeing whether a company's top line is expanding, flat or shrinking.
Jupick reads revenue growth in the profitability area together with ROE and operating margin. When a company with a high margin also grows sales steadily, it is read as having a base on which the absolute size of its profit can grow too.
How to read it
In general, positive and larger revenue growth is read as faster top-line growth. In Jupick's strengths and weaknesses summary, 15% or more is generally labeled “Revenue is growing fast” and negative growth “Revenue is shrinking”.
The natural expectation for growth differs with a company's size and how mature its sector is, though. A large mature company that already dominates its market growing in single digits is different in character from a small company in an early market growing in double digits.
The quality of growth matters too. Sales rising while operating margin falls can be growth bought by giving up profit, while sales and margin rising together is healthier growth.
Revenue growth across the market now
The values that fall at each point when the stocks Jupick covers are lined up by Revenue growth, smallest to largest. Positions in the line are used instead of an average because a few unusually large values can drag a single average a long way.
KoreaBased on 176 stocks
| Lowest 25% | Middle | Highest 25% |
|---|---|---|
| 0.4% | 7.6% | 21.4% |
Smallest value -29.6%, largest value 143.5%
Of the major Korean stocks, only 176 made it into this table. Left out: 24 stocks whose value is not a measured one.
OverseasBased on 199 stocks
| Lowest 25% | Middle | Highest 25% |
|---|---|---|
| 5.3% | 10.4% | 19.6% |
Smallest value -7.3%, largest value 1111.0%
Stocks are rarely left out at random. Companies for which a metric does not hold, or for which the source gives no value, tend to be the ones in weaker shape, so the stocks left in the table are the ones in better condition. The middle value of such a table leans to the favorable side compared with the whole market, and the more stocks are left out, the more it leans.
How to read each range
- Lowest 25%
- The bottom quarter for the change in sales from a year earlier. Companies whose sales fell, if any, generally fall here. The base effect, where this year looks low because last year was unusually strong, also produces this band.
- Middle half
- The change in sales is in the common range for the market. A mature large company growing steadily in single digits and an early-stage company pausing briefly land in the same band, so it helps to look at size as well.
- Highest 25%
- The top quarter for fast sales growth. Acquiring and merging with another company makes sales jump regardless of the competitiveness of the core business, so values in this band are best read after checking where the growth came from.
The two values at either end of the table above are the boundaries that split the stocks into three groups. What it means to belong to each group is written above.
Two stocks that fall just either side of a boundary have practically the same value. Being in different groups does not by itself make them different. The boundaries are drawn again from each day’s sample, so a company can change groups even when nothing about it has changed.
Lowest and highest describe the order of size only, not good or bad. The data is updated once a day.
Stocks with high revenue growth now
- 1BCapital One Financial Corporation1111.0%
- 2SMicron Technology, Inc.379.3%
- 3CSK Bioscience Co.,Ltd143.5%
- 4BHANWHA AEROSPACE CO., LTD.137.6%
- 5CABL Bio Inc.137.6%
Stocks on Jupick's watchlist with positive recent revenue growth, sorted from the highest.
Points to watch
- The base effect can distort it. If last year's results were unusually weak, this year's growth looks larger than it really is, and if last year was unusually strong, this year can look sluggish.
- Sales that jump suddenly through mergers and acquisitions need to be kept apart from organic business growth. Acquiring and absorbing a company makes sales jump, but not because of the competitiveness of the core business.
- Looking at the trend over several years, rather than judging from a single year, avoids being misled by temporary swings.
- For exporters exposed to large exchange rate swings, sales converted into Korean won can swing even when actual volumes are unchanged.