What is 5Y CAGR?
The compound annual growth rate over 5 years, showing smooth annualized growth for various metrics like revenue, earnings, or FCF.
Think of it like this
Like measuring your average annual salary increase over 5 years - smooths out the bumps to show the trend.
Formula
CAGR = (Ending Value รท Beginning Value)^(1/5) - 1- Ending Value: Most recent year's figure
- Beginning Value: Figure from 5 years ago
- CAGR: Compound Annual Growth Rate
Why it matters
- Shows sustainable growth trajectory
- More meaningful than single year growth
- Helps project future potential
- Smooths out volatility
What's a good value?
> 15%
High Growth
Exceptional growth trajectory
8-15%
Strong
Above-market growth
3-8%
Moderate
Steady, sustainable growth
< 3%
Low
Slow growth or mature business
Real-world example
Amazon maintained 20%+ revenue CAGR for decades before slowing in recent years.
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