Return on Equity (ROE)
Also called: ROE
Net income as a percent of shareholders' equity — how efficiently a company turns invested capital into profit.
ROE = net income ÷ shareholders' equity. It measures how much profit a company generates from the money shareholders have put in — a 20% ROE means $0.20 of profit per $1 of equity. Consistently high ROE is a hallmark of a quality, competitively advantaged business, and a screen many growth and quality investors require.
ROE can be inflated by heavy debt (which shrinks equity), so it's best read alongside debt levels and its sibling ROA (return on assets). A durable, high ROE not driven by leverage is the gold standard.
On StockSetups
ROE (and ROA) are screener fields on StockSetups, so you can require a baseline of business quality behind the chart pattern.
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