Return on equity (ROE)
Profit earned for every unit of shareholders money left in the business.
It is the headline rate at which retained profit compounds, which over a decade matters more than the price you paid.
How it is computed here
Net income / shareholders equity x 100
Combines more than one basis. See the note. The pipeline prefers the data vendor's published trailing-twelve-month ratio when one exists, and falls back to recomputing from the latest filed fiscal year when it does not. Those two are different measurements: the vendor figure puts twelve months of flow over the most recent quarterly balance sheet. The source trail on each figure names which path produced it. Filed under quality. Higher is the stronger reading, other things equal.
The readings, and where the lines come from
| Range | Reading |
|---|---|
| below 8.0% | Likely below the cost of equity |
| 8.0% to 15.0% | Ordinary |
| 15.0% to 25.0% | Strong |
| 25.0% and above | Exceptional, check the leverage |
A practitioners’ convention, not an estimated boundary. Anchored on the cost of capital: Damodaran's annual global cost-of-capital dataset puts the mature-market median near 8 percent.
When it misleads
- Leverage raises this figure without improving the business. A company that borrows to buy back stock manufactures a higher return on equity out of nothing.
- Meaningless when shareholders equity is negative. It is shown as "n/m" with the reason, never as a number.
- Return on invested capital is the better question because it cannot be inflated by borrowing.
Reads differently for banks, REITs: the figure is shown with that caveat attached.
Ten filed years of it, company by company
Any covered company has the page at /metrics/roe/TICKER. These are the ones with at least 5 computed years among the largest companies covered, listed alphabetically.
AAPL · ABBV · ABT · ADI · AMAT · AMD · AMGN · AMZN · ANET · APH · ASML · AVGO · AXP · AZN · BABA · BAC · BHP · BLK · BRK-B · BUD · C · CAT · COP · COST · CRM · CRWD · CSCO · CVX · DE · DHR · DIS · ETN · GE · GILD · GOOG · GS · HD · HSBC · IBM · INTC · JNJ · JPM · KLAC · KO · LIN · LLY · LRCX · MA · META · MRK · MRVL · MS · MSFT · MU · MUFG · NEE · NFLX · NOW · NVDA · NVO · NVS · ORCL · PANW · PBR · PEP · PFE · PG · PLTR · QCOM · RTX · RY · SAN · SAP · SCCO · SCHW · SHEL · SHOP · SNDK · STX · T · TD · TJX · TM · TMO · TMUS · TSLA · TSM · TTE · TXN · UNH · UNP · V · VZ · WELL · WFC · WMT
Questions
How is return on equity calculated?
Net income / shareholders equity x 100. Combines more than one basis. See the note. The pipeline prefers the data vendor's published trailing-twelve-month ratio when one exists, and falls back to recomputing from the latest filed fiscal year when it does not. Those two are different measurements: the vendor figure puts twelve months of flow over the most recent quarterly balance sheet. The source trail on each figure names which path produced it.
What does return on equity tell a value investor?
It is the headline rate at which retained profit compounds, which over a decade matters more than the price you paid.
When does return on equity mislead?
Leverage raises this figure without improving the business. A company that borrows to buy back stock manufactures a higher return on equity out of nothing. Meaningless when shareholders equity is negative. It is shown as "n/m" with the reason, never as a number. Return on invested capital is the better question because it cannot be inflated by borrowing.