Listed for Year One and Three, this figure represents the compounded or annualized growth rate in a company's net income. The one-year growth rate is calculated from the second fiscal year (FY2) to the most recently completed fiscal year (FY1); the three-year growth rate is calculated from the fourth fiscal year (FY4) to the most recently completed fiscal year (FY1).
Origin
This information is taken directly from the company’s annual and quarterly income statements for the time period.
Benefit
Net income growth shows how rapidly a company has been able to boost its "bottom line." Growth investors might look for companies with net income growth of, say, 20% or more. If net income growth is NMF, it means the company lost money in one of the years used in the growth-rate calculation, making any growth rate Not Meaningful.
For the Pros
By comparing the three-year annualized growth rate with the one-year growth rate, you can see whether a company’s net income growth is speeding up or slowing down. By comparing net income growth with sales growth, you can see whether the company has been able to translate increased revenues into increased profits. Finally, by comparing net income growth with earnings-per-share growth, you can see how much, if any, share issuances have weighed down earnings-per-share growth.