Sales growth doesn’t guarantee EPS growth:

Although growth in sales is usually a good thing, it does not necessarily translate to EPS growth. Here’s why:

Sales are only half the story. While growing sales can most definitely translate into higher EPS, they’re not the whole story. A company’s overall profitability hinges on numerous factors other than revenue.
Rising costs can eat into profits. Even if the sales are high, if a company’s operating expenses, manufacturing costs, or administrative overhead rise at a higher rate, the net profit falls, resulting in reduced EPS.
Share dilution affects EPS. A company may record its net profit rising, but if it brings out a huge number of new shares, the overall profit is divided among more shares, which can even reduce EPS.
One-off income can deceptively pump up EPS. At times, EPS may appear good because of a short-term surge from “other income” – such as disposing of assets or getting a payout on an insurance policy – and not because of consistent sales increases. This is not a healthy or sustainable mechanism to increase EPS.
Tax advantages can be transient. A reduced tax payment or tax refund boosts EPS, but these are usually isolated incidents and do not represent the core operational performance of the company.

Why It Matters

Finally, EPS growth is what usually creates share price growth. Investors want companies that are growing more profitable on a per-share basis. Yet, sales growth is still the best gauge of whether a company’s underlying business is strong and growing. Healthy sales imply the company is stealing market share and its products or services are popular, setting the stage for lasting future profitability.