GrowthGM Stability#100

EPS Stability

EPS Stability expresses the rate at which the business is expanding. Value investors to size durable revenue and free cash flow expansion when EPS Stability aligns with the rest of the VMCI 120-i.

By Javier Sanz, Founder & Lead AnalystEditorially reviewed

Last updated: March 23, 2026Reviewed by: Javier Sanz

Formula

Standard deviation of gross margin over 5 years (percentage points)

Description

Measures the consistency of gross margin over the past five years. Low variability indicates a business with stable pricing power and predictable cost structure. Warren Buffett has noted that companies with stable margins tend to have durable competitive moats.

Interpretation

Below 3 percentage points of standard deviation is excellent. Above 5 points suggests the business may be exposed to commodity price swings, competitive pressures, or volatile input costs. Compare to industry norms.

Related metrics: Revenue Growth 1Y, Revenue CAGR 3Y. (Updated 2026)

FAQ

How is EPS Stability calculated?+

EPS Stability uses the formula: Standard deviation of gross margin over 5 years (percentage points). compare against sector median on /screener with the Sector filter applied. ValueMarkers refreshes the calculation within 24 hours of each new SEC filing using Multi-year SEC filings + Damodaran growth-rate datasets.

What is a good EPS Stability value by sector?+

There is no single 'good' value for EPS Stability — context is sector-driven. compare against sector median on /screener with the Sector filter applied. The /screener exposes sector-relative percentiles for EPS Stability on every ticker, so you can compare against the sector median rather than the broad-market median.

Which investors use EPS Stability?+

Peter Lynch, Philip Fisher, Bill Miller cite EPS Stability as a key input to to size durable revenue and free cash flow expansion. The academic anchor is Mauboussin's 'measuring the moat' framework. ValueMarkers weights this within the Growth pillar of the VMCI score (12% of total).

What are the limitations of EPS Stability?+

EPS Stability can mislead in high growth at unsustainable unit economics (cash-burn traps). Pair EPS Stability with at least two cross-checks from other VMCI pillars — for example, free cash flow trend, balance-sheet quality, and earnings consistency — before drawing a single-metric conclusion.

Where can I see live EPS Stability data?+

Visit any /stock/[ticker] page on ValueMarkers to see live EPS Stability data, sector percentiles, and the VMCI composite score that integrates EPS Stability with 119 other indicators across 100,000+ stocks. The free /screener exposes EPS Stability as a filterable column.

Related Growth Indicators

Revenue Growth 1YSGA/Rev

Revenue Growth 1Y measures the rate at which the business is expanding. Value investors to size durable revenue and free cash flow expansion when Revenue Growth 1Y aligns with the rest of the VMC.

Revenue CAGR 3YR&D/Rev

Revenue CAGR 3Y expresses the rate at which the business is expanding. Value investors to size durable revenue and free cash flow expansion when Revenue CAGR 3Y aligns with the rest of the VMCI 1.

Revenue CAGR 5YOpEx Ratio

Revenue CAGR 5Y expresses the rate at which the business is expanding. Value investors to size durable revenue and free cash flow expansion when Revenue CAGR 5Y aligns with the rest of the VMCI 1.

EPS Growth 1YRev/Employee

EPS Growth 1Y expresses the rate at which the business is expanding. Value investors to size durable revenue and free cash flow expansion when EPS Growth 1Y aligns with the rest of the VMCI 120-i.

EPS Stability

Formula

Description

Interpretation

Further Reading

FAQ

Related Growth Indicators

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