CAGR
Compound Annual Growth Rate · CAGR
The average annual growth rate over multiple years, accounting for compounding.
CAGR = (Koncová hodnota / Počáteční hodnota)^(1/počet let) − 1
Valuation MultiplesWhat it is
CAGR = (Ending Value / Beginning Value)^(1/number of years) − 1
CAGR smooths year-to-year fluctuations and shows the "average" growth rate as if the company grew at the same rate every year. It is the most commonly used metric for expressing historical or estimated growth rates of revenue, earnings, FCF, or share price.
Why track it
Simple averaging of annual growth rates (arithmetic mean) can be misleading. CAGR accounts for the compounding effect — it is precise and comparable across periods of different lengths.
Compare CAGR of revenue, EBITDA, and FCF — if FCF grows faster than revenue, the company is exhibiting operating leverage.