|Park Hotels & Resort||10.90%||USA||Financials|
|China International Capital||16.30%||China||Financials|
|Yum China Holdings||17.60%||USA||Consumer Services|
|Versum Materials||76.80%||USA||Basic Materials|
|Samsung Biologics||0.00%||Korea||Health Care|
|Quality Care Property||2.10%||USA||Financials|
|Liberty Expedia Holding||53.00%||USA||Consumer Services|
|Lamb Weston Holdings||20.80%||USA||Consumer Goods|
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. 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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