The Growth score answers a more specific question than "is this company growing" — it asks whether that growth is steady, whether it holds up against what the sector typically manages, and whether it's speeding up or slowing down over time.
The Growth score is built from profit CAGR measured over two different time windows, plus a check on whether growth is accelerating or decelerating. The exact breakdown, out of 100 points: the primary, long-run profit CAGR contributes 50 points, measured against the sector's typical growth rate rather than a fixed universal bar. The 3-year CAGR contributes 30 points, also sector-relative. The remaining 20 points come from an acceleration check — specifically, whether the 3-year CAGR is running faster than the long-run rate, which would suggest growth is speeding up rather than settling into a slower, more mature pace.
Then a Profit vs Revenue Alignment adjustment of roughly ±3 to ±6 points, described in more detail below.
See How Our Scores Work for the exact formula and weighting used, including the alignment adjustment.
A single growth number, taken from one time window, can be genuinely misleading — a strong 3-year CAGR sitting on top of a much weaker long-run trend tells a very different story than the same 3-year figure representing a genuine, sustained acceleration. By deliberately weighing both a long-run and a shorter-run measure against each other, the Growth score captures the trajectory, not just a snapshot.
This matters because the market tends to reward accelerating growth more generously than merely steady growth at the same absolute rate — a business whose growth is genuinely speeding up is telling a different, often more valuable and durable story than one that's simply maintaining a stable pace year after year.
A further adjustment — the Profit vs Revenue Alignment check, worth roughly ±3 to ±6 points — penalizes profit growth that's been running meaningfully ahead of revenue growth for too long, since this usually reflects margin expansion running out of room to continue rather than durable, sustainable strength going forward.
The Growth score is most useful when:
Two situations get special treatment rather than being forced through the standard formula. Cyclical businesses — where profit naturally swings up and down with a broader commodity or industry cycle — use a cycle-averaged growth calculation instead of raw year-over-year figures, so that landing on an unusually strong or weak point in the cycle doesn't distort the result.
Companies with a recent latest-year loss, or too little trading history for a full CAGR calculation (recently listed companies), each use a separate calculation built specifically for that situation, rather than being forced through a formula that assumes data these companies simply don't have yet.
"Northbridge Software" (illustrative) posted a long-run profit CAGR of 18%, well ahead of its sector's typical 12%, and a 3-year CAGR of 24% — meaningfully faster than its own long-run rate. No meaningful profit vs revenue gap, so no alignment penalty applies:
This combination of strong sector-relative growth on both time windows, plus genuine acceleration earning nearly full marks on that component, produces a score that reflects real, broad-based momentum rather than one flattering figure alone.
"Coastal Pharma" (illustrative) shows a 3-year CAGR of 20% — an impressive figure on its own — but its long-run CAGR is a similar 19%, meaning growth is steady rather than genuinely speeding up:
Both CAGR components score comfortably, reflecting genuinely strong growth in absolute terms. But because the recent pace isn't meaningfully outrunning the long-run trend, the Acceleration component — worth 20 points on its own — contributes only a small fraction of what it could, pulling the combined total down from what a first glance at either CAGR figure alone might suggest.
"Ironclad Distributors" (illustrative) shows profit CAGR significantly ahead of its own revenue CAGR, sustained over several years — a pattern the Profit vs Revenue Alignment check specifically flags:
Without the alignment adjustment, this would have been a genuinely strong score around 80. The −6 penalty reflects the real possibility that continued margin expansion, not genuine underlying business strength, is driving the profit growth figure — exactly the kind of nuance a raw CAGR number alone wouldn't surface.
Because a single window can be misleading — a strong recent period sitting on top of a much weaker long-run trend, or vice versa, tells a genuinely different story than either window alone. Weighing both together, and specifically checking whether one is outrunning the other, captures the trajectory rather than a single snapshot.
Companies without enough trading history for a full CAGR calculation use a separate approach built specifically for limited data, rather than being forced through the standard formula with data they don't yet have.
Growth is measured against the company's own sector, not a universal benchmark — a growth rate that looks impressive in absolute terms can be fairly ordinary for a sector where that pace is typical, especially without genuine acceleration on top of it.
Rather than using raw year-over-year figures, which can land at very different points in the cycle depending purely on timing, cyclical businesses are scored using a cycle-averaged growth calculation — smoothing out the natural ups and downs so the score reflects the underlying trend rather than wherever the company happened to sit in its cycle at measurement time.
A company with negative or declining profit growth would score toward the low end of the range, though the exact treatment depends on the specific pattern — a company recovering from a recent loss, for example, uses a separate calculation designed for that situation rather than the standard CAGR-based formula, which doesn't work cleanly when the starting figure was negative.
The full formula, including exact weights for each component and how the alignment adjustment is calculated, is published on the How Our Scores Work page.