Return on equity reveals how much profit a company earned in comparison to the total amount of shareholder equity found on the balance sheet. This is the average ROE over the last five years.
Widely used by investors, the ROE ratio shows the return being generated for every pound of equity on the balance sheet. It should be thought of as the 'internal return' that the company generates, and should not be mistaken with the market returns that shareholders may attain.
It varies by industry but ROEs of 15% or over are usually considered desirable. High ROE numbers sustained over the long term may indicate a company has a 'sustainable competitive advantage'. Such companies tend to sell at higher valuation multiples.
The impact of leverage is one of the disadvantages of focusing on ROEs as it can skew ROE upwards - an alternative is to look at Return on Capital Employed.
| Ticker | Name | ROE % 5y Avg | StockRank™ |
|---|---|---|---|
| NAQ:TH | Target Hospitality | 32230.87 | 30 |
| NYQ:BPT | BP Prudhoe Bay Royalty Trust | 10541.13 | 62 |
| NYQ:NRT | North European Oil Royalty Trust | 6573.57 | 64 |
| NYQ:CL | Colgate-Palmolive Co | 6437.35 | 72 |
| NYQ:PBT | Permian Basin Royalty Trust | 4202.89 | 54 |
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