The Big 5 Growth Rates
Five key metrics that reveal whether a company has a durable competitive advantage and consistent financial performance.
What are the Big 5?
The Big 5 are five financial growth metrics that value investors use to quickly assess the quality of a business. Rather than looking at a single year's results, the Big 5 measure how consistently a company has grown over a decade — revealing whether its success is structural or just a lucky streak.
A company that grows all five metrics at 10% or more per year for a decade almost certainly has a strong competitive moat — something that protects it from competition and allows it to compound value for shareholders over time.
Is the company becoming more profitable per share over time? Rising EPS means the business is earning more money for each share you own.
Is the company building owner value over time? Equity per share (total equity ÷ shares outstanding) shows how much the business is worth on paper per share.
Is the company consistently growing its top line? Sustained revenue growth is the foundation of long-term earnings growth.
Is the company generating more real cash each year? Free cash flow (operating cash flow minus capex) is the lifeblood of a business — it funds dividends, buybacks, and reinvestment.
Is management efficiently deploying capital? ROIC measures how much profit the company generates for every dollar invested in the business.
Learn more about ROIC →Why it matters
A company that consistently grows all five metrics at 10%+ per year likely has a strong moat — a durable competitive advantage that protects it from competition. Think of brands, patents, network effects, or switching costs that make it hard for competitors to steal customers.
The Big 5 filter out companies that look good in one year but lack staying power. If a company can grow EPS, equity, sales, and free cash flow at 10%+ for a decade while maintaining high ROIC, it's almost certainly a wonderful business — the kind worth owning for the long term.
How it's calculated
Each of the first four metrics is measured as a CAGR (Compound Annual Growth Rate) over 10 years. If 10 years of data isn't available, 5 years is used as a fallback.
CAGR Formula
CAGR = (End Value / Start Value) ^ (1 / Years) - 1
ROIC is not measured as a CAGR — it's a rate (profit ÷ invested capital). PaybackPrice uses the average of the most recent 3 years for stability.
Example
If a company's EPS was $1.00 ten years ago and is $2.59 today:
CAGR = (2.59 / 1.00) ^ (1/10) - 1
= 2.59 ^ 0.1 - 1
= 1.10 - 1
= 0.10 = 10% per year ✓This company passes the EPS growth test — it has grown earnings at exactly 10% per year for a decade.
How PaybackPrice uses it
PaybackPrice automatically calculates all five metrics for any US stock using 10 years of financial data from Financial Modeling Prep. Each metric is shown with a green ✓ (pass, ≥ 10%) or red ✗ (fail, < 10%), so you can assess a company's quality at a glance — without touching a spreadsheet.
See the Big 5 in action — analyze any US stock for free:
Analyze a stock free →