How to Calculate a Stock’s Five-Year Return and CAGR

Calculate a stock’s five-year return to see how much its price changed over the period, and its compound annual growth rate (CAGR) to express that change as a smoothed yearly rate. Enter the starting and ending historical prices; the results show total price return and annualized price growth, before dividends, taxes, or fees.

Formula

Total price return (%) = ((ending price − starting price) / starting price) × 100, or (ending price / starting price − 1) × 100.

CAGR (% per year) = ((ending price / starting price)^(1 / number of years) − 1) × 100. In this calculator, the period is exactly five years.

• Starting price is the stock price at the beginning of the period, in currency per share.
• Ending price is the stock price at the end of the period, in the same currency per share.
• Number of years is the elapsed time between the two price dates, expressed in years. The calculator uses 5.

Use prices from the same share class and currency. The formula measures price performance only. To measure an investor’s total return, dividends and relevant cash-flow timing must also be considered.

Worked Example

The calculator defaults are a starting price of 100 and an ending price of 150, both in the same currency per share, over five years.

1. Price return = ((150 / 100) − 1) × 100 = 50.00%.
2. Price ratio = 150 / 100 = 1.5.
3. Five-year CAGR = ((1.5)^(1 / 5) − 1) × 100.
4. 1.5^(0.2) is approximately 1.08447, so CAGR = (1.08447 − 1) × 100 = 8.45% per year.

The stock’s price rose 50% overall, equivalent to a smoothed compound annual increase of 8.45% over five years. CAGR is not a claim that the stock rose by exactly that amount in each individual year.

What You’ll Need

• A reliable historical-price source, such as a brokerage statement or financial data service.
• The price for a date about five years ago and a price for the chosen ending date.
• A consistent price basis: check whether each figure is adjusted for stock splits and whether it includes dividend adjustments.
• A calculator or spreadsheet if you want to check the arithmetic. The calculator above needs only the two prices and assumes five years.

Step-by-Step

1. Choose the dates. Decide the exact start and end dates. For a five-year holding-period comparison, use matching calendar dates five years apart where possible. If a market holiday or weekend means no price exists on that date, use and record the nearest available trading date. The actual elapsed period may then differ slightly from five years.
2. Find historical prices. Look up the stock’s historical data for both dates. Note whether the source reports closing prices, adjusted closing prices, or another measure. Use the same type of figure for both dates.
3. Check for corporate actions. A stock split changes the number of shares and the quoted price without, by itself, creating a gain or loss. Prefer prices adjusted consistently for splits. Dividend-adjusted prices may include reinvested dividends, so they produce a different measure from a simple price return.
4. Enter the starting price. Type the beginning price in the first field. Use a positive number and the same currency and per-share basis as the ending price.
5. Enter the ending price. Type the price for the end date in the second field. Avoid mixing a raw close with a split-adjusted or dividend-adjusted figure.
6. Read the five-year price return. The first result is the percentage change from start to finish. A positive figure means the ending price is higher; a negative figure means it is lower. For example, 50% means the ending price is 1.5 times the starting price.
7. Read the CAGR. The second result converts the whole-period change into a compound annual rate. A positive CAGR indicates growth over the full period; a negative CAGR indicates decline. Treat it as a summary rate, not a description of the stock’s path year by year.
8. Save the inputs and assumptions. Record the source, dates, price type, currency, and whether dividends were included. This makes the calculation easier to verify or reproduce later.

Common Mistakes

• Using the wrong time span: A five-year formula is appropriate only for a five-year interval. If the dates span a different duration, replace 5 in the CAGR formula with the elapsed years.
• Confusing total return with price return: The basic calculation ignores dividends. A dividend-adjusted series may reflect reinvestment and should not be described as a plain closing-price comparison.
• Mixing adjusted and unadjusted prices: This can make a split or dividend look like an unexplained jump or loss. Keep the basis consistent.
• Using different currencies or share classes: Compare like with like. Currency conversion or a different share class introduces another factor.
• Calling CAGR the average annual return: CAGR is the constant rate that links the start and end values. It does not show volatility or the actual return in each year.
• Rounding too early: Keep the prices at their available precision and round only the final percentage. Early rounding can alter the result slightly.

Tips

• For a precise anniversary comparison, verify the trading dates rather than assuming the first and last rows in a data table are exactly five years apart.
• If the period is not exactly five years, calculate elapsed time using the actual dates. A common practical convention is days elapsed divided by 365.25; state the convention because sources may differ slightly.
• Use adjusted historical data only when you understand what adjustments it includes. For total-return analysis, check whether dividends are assumed to be reinvested and whether the data is adjusted for splits.
• Compare the result with a suitable market index over the same dates and on the same return basis if you want context. That comparison still does not predict future performance.
• Keep more decimal places in intermediate calculations, but report a sensible number of decimals. Two decimal places are usually enough for a quick comparison.

Troubleshooting

• The calculator rejects a value: Both prices must be greater than zero. Check for a blank field, a misplaced decimal point, or a currency symbol entered where only a number is accepted.
• The return looks extremely large or negative: Confirm the dates, decimal placement, share class, currency, and split adjustments. A very low starting price can make a later rise look especially large in percentage terms.
• The answer does not match another website: Compare the exact dates and the data type used. One source may use closing prices while another uses adjusted closes, or may select a nearby trading day.
• The stock split during the period: Check whether both prices are expressed on the same post-split share basis. If not, obtain consistently split-adjusted prices before comparing them.
• You need a period other than five years: Use the total-return formula unchanged, but use the actual elapsed years in the CAGR exponent: 1 divided by years. Do not use the fixed five-year output for another interval.

Frequently Asked Questions

Does this calculate a stock’s total return?
No. It calculates price return from the two prices. Total return generally accounts for dividends and may assume they were reinvested.

Can CAGR be negative?
Yes. If the ending price is below the starting price, CAGR is negative for the period.

Does CAGR mean the stock grew steadily each year?
No. It is a smoothed rate that connects the start and end prices. Actual annual returns can vary widely.

Should I use adjusted close or closing price?
Use the same measure at both endpoints. Closing prices are suited to a price-only comparison; adjusted prices may account for splits or dividends, depending on the source.

What if the dates are not exactly five years apart?
Use the actual elapsed time in years for CAGR rather than 5. Mention the day-count convention if you are comparing results from different sources.

Does a past five-year return predict future performance?
No. It describes only the selected historical period and does not guarantee or forecast future results.

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in start | Starting price | currency/share | 100 | 0
in end | Ending price | currency/share | 150 | 0
out ret | Five-year price return | % | (end / start - 1) * 100 | 2
out cagr | Five-year price CAGR | %/year | ((end / start) ^ (1 / 5) - 1) * 100 | 2