Cramers way of calculating growth.

[Londoner11]

I am a beginner and I have a question:

When Jim talks about a companies growth rate (for example he recently said on his podcast that GoldmanSachs is growing at 15%) and he always compares that growth rate to the P/E multiple (he is willing to pay a p/e twice as big as the growth rate). My question is, HOW DOES HE CALCULATE THE GROWHT RATE???
What is the number that he is calculating the growth from? Sales, Profit? EPS?:cry:

Please Help,

TS

[Empire]

I'm new at this as well, but it's the average quarterly revenue growth (I believe). If you use yahoo, it's in the key statistics. [attached]

[madcowdisease]

I am a beginner and I have a question:

When Jim talks about a companies growth rate (for example he recently said on his podcast that GoldmanSachs is growing at 15%) and he always compares that growth rate to the P/E multiple (he is willing to pay a p/e twice as big as the growth rate). My question is, HOW DOES HE CALCULATE THE GROWHT RATE???
What is the number that he is calculating the growth from? Sales, Profit? EPS?:cry:

Please Help,

TS

Hey new-b, Cramer is a cornucopia of knoweldge but I would be weary of pauing twice the growth rate in all but the hottest markets (think dot-com bubble). You'll be hard pressed to get 2Xs the growth in most markets. If you find a stock growing faster then the P/E then you may have something. 1.5Xs growth is a safer strategy.

[robvia]

I believe he's using the 5 year Analysts Estimates. For GS it's on this page.
http://finance.yahoo.com/q/ae?s=GS
For GS it's 15%.
I verified this with a couple other picks he just had on his show, like ALSK at 12% and T at 9%. They match.
On the Yahoo page, bring up a stock, then on the left side click on Analysts Estimates. Now scroll down to the Growth Estimate section, then look at the Next 5 years (per annum).

[zyzzyva57]

Cramer loves to see Growth in terms of "expandability"--that is, can a company expand without eating into its foundation

With retail, the metric is Same Store or restaurant sales

For a regional company going national this is obviously easier

Another way to see this is in terms of the Law of Diminishing Returns: for example, Wal-Mart increases sales but by building stores that eat into existing store sales existing store sales hurt--a super Wal-Mart by its very nature is expensive to run

Cramer likes Lowes over Home Depot, because Lowes has more stores it can build without eating into sales of existing stores

For me, when Cramer talks about Growth, I think of the Law of Diminishing Returns, which looks like a Bell Curve

Thus, in evaluating a company does its growth go up or "Bell Curve" down

To me, as with charts, I can make stock evaluation visual which I like