Sustainable Growth Rate

The sustainable growth rate measures the approximate speed with which a company could grow using internally generated cash without issuing additional debt or equity. The rate is calculated by multiplying the company's retention rate by its return on equity. This data point will be different from what legacy users of Morningstar’s Portfolio Manager tool will see, as we are now using an enhanced calculation that uses net income from continuing operations (instead of net income), as well as ROE that is calculated by averaging all reported values during the period, as opposed to the end-of-year value.