|Jastrzebska Spolka Weglowa||0.60%||Poland||Basic Materials|
|Metro Pacific Investments||11.50%||Philippines||Utilities|
|Aker BP ASA||8.80%||Norway||Oil and Gas|
|Grupo Simec B||15.90%||Mexico||Basic Materials|
|Mebuki Financial Group||7.60%||Japan||Financials|
Return on Equity ratio measures the ability of a company to generate profits from its own equity (capital less debt).
However, all companies with a return on equity (ROE) high do not necessarily make good investments. Some have high ROE because they require little equity (consulting firm, for example). Other industries require significant infrastructure so they need much more Equity. These two kinds of firms are not comparable only looking at ROE. Indeed, capital-intensive industries are located in markets where barriers to entry limit the competition.
|Highest ROE companies|
|Marriott International||98.10%||USA||Consumer Services|
|Pandora A/S||96.30%||Denmark||Consumer Goods|
|MMC NORILSK NICKEL||86.30%||Russia||Basic Materials|
|Daily Mail & Gn Tr A||83.60%||UK||Consumer Services|
|Tower Bersama Infras||83.60%||Indonesia||Technology|
High rate of return companies (high ROE) with little equity contribution will be competing more strongly because the entry barriers will be more permeable. In the latter case, the risk of being copied by competitor is higher.
Like many financial ratios, ROE only makes sense when one wishes to compare companies in the same sector.
A high ROE provides no immediate benefit. The price of a share is primarily guided by the earnings per share. However, in the context of globalization, large companies operating with corporate governance are trying to accomplish certain goals, including a high return on equity for shareholders, which orient their policies.
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