Year over Year (YoY)

A mode of analyzing time-series data by comparing years

What is YoY

The year over year (YoY) analysis is useful when comparing annualized data. Analysts are able to deduce changes in the quantity or quality of certain business aspects. In finance, investors usually compare performance of financial instruments in a year over year basis to gauge whether or not an instrument will continue to yield as expected. This analysis is also very useful when analyzing growth patterns and trends.

Economic analysts also commonly use this approach when analyzing countries and their overall economic situation. For example, the YOY approach finds that the Japanese GDP has grown 2% in 2016 as compared to 2015, while analysts previously only projected an increase of 1.8%.

The Year over Year approach may also be useful in analyzing revenue by month, especially when the sources of revenue are cyclical. This allows an apples-to-apples comparison of revenue, instead of comparing revenue to months with disproportionately higher seasonal sales.

For example, in the relatively seasonal chocolate industry, it would be more useful to compare revenue growth between January 2016 and January 2017 (where sales are high due to winter sales), as opposed to comparing January 2016 to February, where holiday sales have started to slow.  By comparing likewise months in a year-over-year fashion, the comparison becomes more relevant than two adjacent months that are affected by varying seasonality or other factors.

Common Metrics Analyzed Year Over Year:

  • Revenue / sales growth
  • Revenue projections
  • Earnings per share (EPS) / net earnings growth
  • Cost trends

Common Economic Indicators Analyzed Year Over Year:

  • Inflation
  • Employment rates
  • GDP Growth
  • Interest rates

Alternatives to Year-over-Year:

  • Quarterly, monthly, or other periodic approaches
  • Rolling year
  • Rolling period
  • Year-to-date