CAGR
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Calculator
CAGR calculator
Enter a starting value, an ending value and the number of years between them. The calculator returns the compound annual growth rate, the total change, and what the same rate would produce over the next five years.
Total change
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Multiple
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The working
What CAGR measures
CAGR is the steady yearly rate that would take the starting value to the ending value in the time given. It is (end / start) raised to the power of 1 / years, minus 1. Revenue that grew from 400 to 640 over five years grew 60% in total and about 9.9% a year compounded.
Use it to put growth figures on the same footing: revenue against earnings, one company against a peer, or a stock's price growth against its EPS growth. If price grew much faster than earnings, the multiple expanded, and that part of the return depended on buyers paying more.
What it hides
The path. Two series with the same start and end have the same CAGR whether they rose smoothly or crashed and recovered. It also depends heavily on the endpoints: start in a bad year and growth looks strong. Try moving the start by a year and see how much the answer changes. For growth in the share count, which eats into per-share results, see shares outstanding and dilution. For an account with deposits, see how to calculate portfolio returns.
Related questions
Is CAGR the same as average annual return?
No. The simple average of yearly returns overstates growth whenever returns vary. A stock that rises 50% and then falls 50% has an average return of 0% and a CAGR of about -13%, because it ends at 75% of where it started.
Can I use CAGR on a portfolio I add money to?
Only if you strip the deposits out first. CAGR compares a start value with an end value and assumes nothing came in or went out between. For an account with deposits, use a time-weighted return, then annualize that.