RETURNS ON EQUITY

RETURN ON EQUITY




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New Companies
Company  ROE  Country Industry
Bandhan Bank19.50%IndiaFinancials
Aveva Group8.80%UKTechnology
ASE Industrial Holding0.00%TaiwanTechnology
Deutsche Wohnen AG19.30%GermanyFinancials
Ambu AS31.80%DenmarkHealth Care
Boubyan Petrochemical1.90%KuwaitBasic Materials

Return on Equity ratio measures the ability of a company to generate profits from its own equity (capital invested by shahorlders plus non-distributed profits).

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
Company  ROE  Country Industry
O Reilly Auto94.90%USAConsumer Services
RELX93.10%UKConsumer Services
Relx NV92.70%NetherlandsConsumer Services
Bausch Health92.00%CanadaHealth Care
Valeant Pharmaceutic92.00%CanadaHealth Care
Matahari Department Store91.70%IndonesiaConsumer Services
Hershey Company91.00%USAConsumer Goods
Pandora A/S91.00%DenmarkConsumer Goods
Braskem S.A. PN90.90%BrazilBasic Materials
MasterCard Cl A88.90%USAFinancials

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.

return on equity ROE

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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