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GrowthR&D/Rev#87

Revenue CAGR 3Y

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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.

Javier Sanz, Founder & Lead Analyst at ValueMarkers
By , Founder & Lead AnalystEditorially reviewed
Last updated: Reviewed by: Javier Sanz

Formula

Research & Development Expenses / Revenue x 100

Description

Measures the company's investment in innovation relative to its revenue. Adequate R&D spending is essential for maintaining competitive position in technology and pharmaceutical industries. Too little may indicate underinvestment in the future, while too much may burden near-term profitability.

Interpretation

The ideal range of 5-15% depends heavily on industry. Tech companies often spend 15-25%. Under 3% in a tech company may signal underinvestment. Above 25% may indicate the company has not yet found a scalable business model.

Related metrics: Revenue Growth 1Y, Revenue CAGR 5Y, EPS Growth 1Y. (Updated 2026)

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Further Reading

FAQ

How is Revenue CAGR 3Y calculated?+
Revenue CAGR 3Y uses the formula: Research & Development Expenses / Revenue x 100. Compounders typically post 12-20% revenue CAGR over 3 years. 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 Revenue CAGR 3Y value by sector?+
There is no single 'good' value for Revenue CAGR 3Y — context is sector-driven. Compounders typically post 12-20% revenue CAGR over 3 years. The /screener exposes sector-relative percentiles for Revenue CAGR 3Y on every ticker, so you can compare against the sector median rather than the broad-market median.
Which investors use Revenue CAGR 3Y?+
Peter Lynch, Philip Fisher, Bill Miller cite Revenue CAGR 3Y 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 Revenue CAGR 3Y?+
Revenue CAGR 3Y can mislead in high growth at unsustainable unit economics (cash-burn traps). Pair Revenue CAGR 3Y 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 Revenue CAGR 3Y data?+
Visit any /stock/[ticker] page on ValueMarkers to see live Revenue CAGR 3Y data, sector percentiles, and the VMCI composite score that integrates Revenue CAGR 3Y with 119 other indicators across 100,000+ stocks. The free /screener exposes Revenue CAGR 3Y as a filterable column.

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