Return on Equity (ROE) measures how much net profit a company generates per dollar of shareholders' equity. It reflects management's ability to generate returns for equity owners, making it a widely used quality metric in stock valuation.
A company with $200M net income and $1B in equity has an ROE of 20%. Warren Buffett typically targets companies with ROE above 15% as part of his quality-focused stock valuation approach.
ROE is a key signal in stock valuation: sustained high ROE indicates a business with competitive advantages. However, it can be inflated by leverage. Comparing ROE to ROIC helps separate genuine quality from financial engineering.
MiniValuator shows ROE as a contextual metric alongside other key figures, helping users assess business quality when setting growth rate assumptions in their stock valuation.
¿Listo para aplicar este concepto? Prueba la Calculadora DCF de MiniValuator — calcula el valor intrínseco de cualquier acción estadounidense en menos de 60 segundos.
