Revenue & Earnings Growth
The two most important drivers of long-term stock returns.
Revenue (top line) and earnings (bottom line) are the core metrics that drive stock prices over the long term. Understanding their trends is the foundation of fundamental analysis.
Revenue (top line)
Revenue is the total amount of money a company generates from selling its products or services before any costs are deducted. It is also called "sales" or "turnover."
Key revenue concepts: - TTM Revenue — Trailing Twelve Months revenue, which sums the last four quarters to give a current annualized view - Quarterly Revenue — Revenue for a single three-month period - Revenue Growth — The year-over-year or sequential change in revenue
Growing revenue signals increasing demand for the company's products. Revenue is harder to manipulate than earnings because it reflects actual sales transactions.
Earnings (bottom line)
Earnings represent profit — what remains after all expenses are subtracted from revenue. Key earnings metrics:
- EBITDA — Earnings Before Interest, Taxes, Depreciation, and Amortization. Measures operating profitability excluding non-cash and financing costs.
- Operating Income (EBIT) — Profit from core operations, including depreciation but excluding interest and taxes.
- Net Income — The final bottom line after all expenses. What shareholders ultimately earn.
The relationship
Revenue growth without earnings growth may indicate a company is spending too much to acquire customers or facing margin pressure. Conversely, earnings growth without revenue growth suggests the company is cutting costs — which has limits.
MetricSide's Growth tab shows all these metrics together on one page, making it easy to see the full growth picture.