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growth rates 3 years, 3 months ago #2604

  • amyers14
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What is the difference between CAGR, "Annual Trend Growth" and "Annual Trend Momentum"?
Alan

Re: growth rates 3 years, 3 months ago #2607

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You can see data definitions for the ratio variables by searching for a partial variable name in the search box at the upper right of the Screener.co website.

The CAGR variables are compound annual growth rates.

"Trend Growth is the Average Annual incremental log linear slope expressed as a percentage."

"Trend Momentum is derived for the most recent period by subtracting the log linear Estimated index value (in index value units) from the Actual index value and divide by the Estimated index value to derive a % deviation. Subtract from the most recent period % deviation the % deviation of the prior period. Express this difference in % deviation as a percentage."

CAGRs can be useful to my analyses, but I have never used the trend growth or trend momentum variables.

Re: growth rates 3 years, 2 months ago #2616

  • mayaincorp
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Did I understand it correctly? For example:

if company in (A) had 20% growth, in (A1) 10% growth, in (A2) 30 % growth "CAGR" will show 60% growth? (20% + 10% + 30%). As it comes to "Trend Growth" it will show 30%? (60%/3)
Oleksii

Re: growth rates 3 years, 2 months ago #2617

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No, CAGR is the compound annual growth rate, not the total growth. For example, if a company grew 20% growth in year 1, 20% growth in year 2, and 20% growth in year 3, the 3-year CAGR would be 20%.

The trend growth and trend momentum variables are more complex. I have never used those variables in my screens, and cannot expand beyond the official Reuters definition on the Screener.co website. I'm sorry I cannot be more helpful with those.
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Re: growth rates 3 years, 2 months ago #2618

  • amyers14
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In your example, the CAGR would actually be:

[(1 + 0.20) x (1 + 0.10) x (1 + 0.30)]^(1/3) = 1.1972 - 1 = .1972 or 19.72%

The CAGR essentially shows you what an "annualized" rate of return would be for the period in question.

Apparently the trend growth and trend momentum are far more mathematically complicated and I am not sure that either are necessarily particularly useful. I have been sticking with CAGR in the models I have been building and using, especially since I can understand that calculation.
Alan
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