Home MarketXLS
Dashboard MarketXLS
Screener MarketXLS
Stock Ranks MarketXLS
Spreadsheet Builder MarketXLS
Logout MarketXLS
Fundamental analysisGuru functionsGuru StrategiesScreenersValuation Models

Buffetology-Eps Growth (Guru Screens)

Written by Robin Bisarya
Fri Mar 19 2021
See how MarketXLS helps you take advantage in the markets.
Download Option Templates →

What can you expect from this article?

1. A brief about the book itself- Buffetology.
2. Significance of the EPS and P/E ratios.
3. Rationale behind combing both of these ratios.
4. How to find value stocks with EPS growth?
5. Do it the marketXLS way.


Mr. Warren Buffett is the most renowned investor of all time. I doubt there is any finance enthusiast on this planet who has not heard about him or his investing style. His former daughter-in-law, Mary Buffett, wrote a book named “Buffettology,” She thoroughly discussed Buffet’s various investing styles’ basic tenets. EPS Growth is one of the parameters that Mr. Buffett likes to look at while picking stocks.


EPS stands for earning per share, which means how much a shareholder will make per share if the company decides to distribute all its earnings. EPS indicates a company’s profitability. More the ratio more is the company’s earnings and hence better the financial health of the company. It can be used to compare a company with its peers.

P/E ratio

P/E stands for the price to earnings ratio, which tells the price investors are willing to pay for each dollar in earnings. The primary aspect of this ratio is to find the valuation of a company. In layman’s terms, to find if a company is overpriced or under-priced. When used alone, PE ratio can be misleading. However, a high PE often suggests that a stock is overvalued and vice versa.

How to use it?

The main idea is to value a company based on its past earnings. That being said, PE alone can be misleading while predicting the future price of a stock. Therefore, it makes sense to combine it with a growth parameter, which is the EPS. Let’s see how Mr. Buffett does it.

In this method, Buffett analyses the company’s long-term growth trend to determine how it may perform in the next 10 years. He takes a combination of two metrics – EPS and P/E.

Firstly, He shortlists the stocks whose average earnings growth rate has been more than 15% over the past 5 to 10 years. Then, He takes the EPS growth of the last ten years and projects the next ten years’ growth. Similarly, He determines the average P/E ratio of the last 10 years and multiplies it with the next 10th year EPS to determine the stock price. Finally, He determines the return rate on the stock, taking the current price as entry and estimated price as an exit. If the estimated return rate comes out to be greater than 15%, he only shortlists that stock for investment.

Let’s understand this using an example:

Let’s suppose any company’s EPS is $4.62 and has been growing at an average rate of 17.6% per year. As per the forecast, it will be $23.37 in 10 years from here.
The average growth rate of the Price to Earnings ratio has been 17.7.
Estimated stock price = 23.37 * 17.7 = $413.65
If the stock price right now is $75, the rate of return will be 18.62% annually, which is greater than 15% and fits perfectly with Warren Buffett’s strategy.
We have not considered the dividend yield of a company in this, so even if the company gives 1.5% of the dividend, the overall return rate will be 20%. (18.62 + 1.5%)

Pick stocks using MS excel

Below is an MS excel template that our website provides for the valuation of a company based on EPS growth. You just enter the ticker symbol of the stock you are interested in and the template gives you the future stock price and the growth rate y-o-y. I took MSFT as an example. The current stock price is $237.1 and if everything goes fine the price will increase to about $710 by 2030. However, the growth rate of 12% doesn’t conform to the cut-off set by Buffet, which is 15%. Mr.Buffet will surely not consider this investment but 12% is not that bad either.


None of the content published on marketxls.com constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person.

The author is not offering any professional advice of any kind. The reader should consult a professional financial advisor to determine their suitability for any strategies discussed herein.

the article is written for helping users collect the required information from various sources deemed to be an authority in their content. The trademarks if any are the property of their owners and no representations are made.


Learn more about Guru screens here.

Interested in building, analyzing and managing Portfolios in Excel?
Download our Free Portfolio Template
Download Option Templates
Stock screens
Public saved screens

Top 100 Gainers Today

Top 100 losers Today

Call: 1-877-778-8358
Ankur Mohan MarketXLS
I am so happy you are here. My name is Ankur and I am the founder/CEO of MarketXLS. Over the past four years, I have helped more than 2500 customers to implement their own investment research strategies and monitoring systems in Excel.
Get Access to 1 Billion Usable Market data points IN YOUR EXCEL SHEETS WITH EASY TO USE EXCEL FUNCTIONSGet started today
Search for a stock

Get Access to 1 Billion Usable Market data points IN YOUR EXCEL SHEETS WITH EASY TO USE EXCEL FUNCTIONS

Get started today

Top MarketXLS Rank stocks

STORE Capital Corporation logo

STORE Capital Corporation

Optionable: Yes
Market Cap: 8,978 M
Industry: REIT - Diversified
52 week range    
Dillard's Inc. logo

Dillard's Inc.

Optionable: Yes
Market Cap: 5,077 M
Industry: Department Stores
52 week range    
Williams-Sonoma Inc. (DE) logo

Williams-Sonoma Inc. (DE)

Optionable: Yes
Market Cap: 8,796 M
Industry: Specialty Retail
52 week range    
ICF International Inc. logo

ICF International Inc.

Optionable: Yes
Market Cap: 2,040 M
Industry: Business Services
52 week range    
First Interstate BancSystem Inc. logo

First Interstate BancSystem Inc.

Optionable: Yes
Market Cap: 4,622 M
Industry: Banks - Regional - US
52 week range    
Global Cord Blood Corporation logo

Global Cord Blood Corporation

Optionable: Yes
Market Cap: 317 M
Industry: Biotechnology
52 week range    
Penske Automotive Group Inc. logo

Penske Automotive Group Inc.

Optionable: Yes
Market Cap: 7,684 M
Industry: Auto & Truck Dealerships
52 week range    
General Mills Inc. logo

General Mills Inc.

Optionable: Yes
Market Cap: 44,923 M
Industry: Packaged Foods
52 week range    
Allegiance Bancshares Inc. logo

Allegiance Bancshares Inc.

Optionable: Yes
Market Cap: 883 M
Industry: Banks - Regional - US
52 week range    
National Research Corporation logo

National Research Corporation

Optionable: No
Market Cap: 948 M
Industry: Diagnostics & Research
52 week range    

More Features