{"id":402,"date":"2022-04-07T08:52:25","date_gmt":"2022-04-07T08:52:25","guid":{"rendered":"https:\/\/www.wallstreetzen.com\/blog\/?p=402"},"modified":"2024-11-27T21:52:48","modified_gmt":"2024-11-27T21:52:48","slug":"what-is-a-good-roe","status":"publish","type":"post","link":"https:\/\/www.wallstreetzen.com\/blog\/what-is-a-good-roe\/","title":{"rendered":"What Is a Good ROE (Return on Equity) and Why Is It Warren Buffett\u2019s Most Important Number?"},"content":{"rendered":"\n<p>I often get asked by users of our <a href=\"https:\/\/www.wallstreetzen.com\" target=\"_blank\" rel=\"noopener\">stock research tool<\/a>: what is a good ROE? And why should I care?<\/p>\n\n\n\n<p>A consistent <strong>return on equity (ROE) of 20%<\/strong> or higher is considered a good ROE.<\/p>\n\n\n\n<p>However, there are some caveats, which I&#8217;ll dive into shortly.<\/p>\n\n\n\n<p>Return on equity is so one of the crucial elements that play into our <a href=\"https:\/\/www.wallstreetzen.com\/zen-ratings\" target=\"_blank\" rel=\"noopener\">Zen Ratings<\/a> system, which evaluates 115 factors proven to drive consistent, stable growth in stocks. You can see each stock&#8217;s Zen Rating on its individual ticker page, as well as scores for each of the seven components that play into the grade. <\/p>\n\n\n\n<p>But I digress. Back to ROE! <\/p>\n\n\n\n<p>In this article, you\u2019ll learn:<\/p>\n\n\n\n<ul>\n<li>Why Warren Buffett called ROE his \u201cmost important number\u201d<\/li>\n\n\n\n<li>What is ROE?<\/li>\n\n\n\n<li>Why 20%+ is a good ROE<\/li>\n\n\n\n<li>Some pitfalls associated with the ROE metric<\/li>\n\n\n\n<li>How WallStreetZen helps you can quickly screen for stocks with a good ROE<\/li>\n<\/ul>\n\n\n    <div id=\"callout-box-block_07fd907421d83969e144dcd95d051534\" class=\"callout-box promo\">\n        <div class=\"callout-box__icon-wrapper\">\n            <svg focusable=\"false\" class=\"callout-box__icon promo\" viewBox=\"0 0 24 24\" aria-hidden=\"true\">\n                <path d=\"M21.41 11.58l-9-9C12.05 2.22 11.55 2 11 2H4c-1.1 0-2 .9-2 2v7c0 .55.22 1.05.59 1.42l9 9c.36.36.86.58 1.41.58.55 0 1.05-.22 1.41-.59l7-7c.37-.36.59-.86.59-1.41 0-.55-.23-1.06-.59-1.42zM5.5 7C4.67 7 4 6.33 4 5.5S4.67 4 5.5 4 7 4.67 7 5.5 6.33 7 5.5 7z\"><\/path>            <\/svg>\n        <\/div>\n        <div class=\"callout-box__content\"><p>Long story short: Fundamental analysis will help you determine which stocks are currently undervalued and will increase in value in the future.<\/p>\n<p><strong>WallStreetZen<\/strong> is built to help long-term, fundamental investors find hidden investing opportunities, even if you don\u2019t have a finance degree.<\/p>\n<p>Start a 14-day trial of WallStreetZen Premium for just $1 with the link below:<\/p>\n<p><a href=\"https:\/\/www.wallstreetzen.com\/plans?redirect_to_checkout=1#comparison\" target=\"_blank\" rel=\"noopener\" data-wpel-link=\"internal\" data-wct-parsed=\"1\"><strong>Unlock Premium<\/strong><\/a><\/p>\n<\/div>\n    <\/div>\n\n\n\n<h1>Why should you care whether a stock has a good ROE?<\/h1>\n\n\n\n<p>In his famous letters to Berkshire Hathaway shareholders, Warren Buffett has consistently emphasized the importance of return on equity (ROE).<\/p>\n\n\n\n<p>It\u2019s the most important numbers he looks at when evaluating a company.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><a href=\"https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2022\/10\/main-qimg-1bdf8501b1d5f40468fb7ceb33beae4f.jpeg\" target=\"_blank\"><img decoding=\"async\" width=\"602\" height=\"283\" src=\"https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2022\/10\/main-qimg-1bdf8501b1d5f40468fb7ceb33beae4f.jpeg\" alt=\"\" class=\"wp-image-1911\"\/><\/a><\/figure><\/div>\n\n\n<p>Why is it important to him? In his own words:<\/p>\n\n\n\n<figure class=\"wp-block-pullquote\"><blockquote><p><strong>\u201cIf you earn high enough returns on equity and you can keep employing more of that equity at the same rate \u2014 that\u2019s also difficult to do \u2014 you know, the world compounds very fast.\u201d<\/strong><\/p><cite>Warren Buffett<\/cite><\/blockquote><\/figure>\n\n\n\n<p>A big part of Warren\u2019s genius is his ability to identify stable, predictable businesses with long histories of producing <strong>above average returns on equity.<\/strong><\/p>\n\n\n\n<p>Identifying and holding these companies with exceptional returns is how Warren has managed to slowly and steadily become <em>the most successful investor of all time<\/em>.<\/p>\n\n\n\n<p>Let\u2019s take a closer look at return on equity and how you can use it in your own stock analysis.<\/p>\n\n\n\n<h2>How To Calculate ROE<\/h2>\n\n\n\n<p>This is the ROE formula:<\/p>\n\n\n\n<blockquote class=\"wp-block-quote\">\n<p><strong>Net income \/ Shareholder Equity<\/strong><\/p>\n<\/blockquote>\n\n\n\n<p>Great, but what does this actually mean?<\/p>\n\n\n\n\n\n<h2>What is ROE (return on equity)?<\/h2>\n\n\n\n<p>Return on equity (ROE) is a measure of the company\u2019s ability to generate profits for shareholders.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><a href=\"https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2022\/10\/what-is-return-on-equity.png\" target=\"_blank\"><img decoding=\"async\" width=\"1246\" height=\"630\" src=\"https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2022\/10\/what-is-return-on-equity.png\" alt=\"\" class=\"wp-image-1912\" srcset=\"https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2022\/10\/what-is-return-on-equity.png 1246w, https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2022\/10\/what-is-return-on-equity-768x388.png 768w\" sizes=\"(max-width: 1246px) 100vw, 1246px\" \/><\/a><\/figure>\n\n\n\n<p>This is <strong>not the same<\/strong> as your &#8220;return&#8221; on investment based on stock price.<\/p>\n\n\n\n<p>The stock price reflects your return based on what the <em><strong>market thinks<\/strong><\/em> about the value of the company, while the return on equity actually measures <em><strong>the performance<\/strong><\/em> of the company directly.<\/p>\n\n\n\n<p>If a company\u2019s stock price tumbles but its ROE stays constant, or even grows &#8211; it can potentially be a sign the company is undervalued.<\/p>\n\n\n\n<p><strong>ROE is important because it directly tracks the profits generated by the company on your shares.&nbsp;<\/strong><\/p>\n\n\n\n<p>It\u2019s right there in the name:<\/p>\n\n\n\n<ul>\n<li><strong>Return<\/strong> = the profits generated by the company<\/li>\n\n\n\n<li><strong>on<\/strong> = divided by<\/li>\n\n\n\n<li><strong>equity <\/strong>= your share of the company!<\/li>\n<\/ul>\n\n\n\n<p><strong>A high return on equity (20%+), generated consistently for many years &#8211; is often the sign of an exceptional company run by a great manager, operating a great business with an economic moat.&nbsp;<\/strong><\/p>\n\n\n\n<p>Successful companies have to constantly be looking at new ways to reinvest earnings profitably.<\/p>\n\n\n\n<p>If they don\u2019t increase earnings proportionally to their equity, ROE will go down.<\/p>\n\n\n\n<p>So a company that has a consistent, or even growing RoE over many years &#8211; is a company where management is consistently finding effective ways to generate more profit on the earnings they generate.<\/p>\n\n\n\n<p>It\u2019s the sign of a good, long-term manager in a business with a durable competitive advantage.&nbsp;<\/p>\n\n\n\n<p>So what is a good return on equity ratio?<\/p>\n\n\n\n<h2>What is a good ROE?<\/h2>\n\n\n\n<p>A return on equity (ROE) of 20+% is considered good, 30% ROE is considered <em>exceptional<\/em>.<\/p>\n\n\n\n<p>You can use WallStreetZen\u2019s <a href=\"https:\/\/www.wallstreetzen.com\/stock-screener\" target=\"_blank\" rel=\"noopener\">stock screener<\/a> to find companies with <a href=\"https:\/\/www.wallstreetzen.com\/stock-screener\/?t=1&amp;p=1&amp;f[roe]=0.2%2C&amp;s=mc&amp;sd=desc\" target=\"_blank\" rel=\"noopener\">good ROE<\/a>, or even <a href=\"https:\/\/www.wallstreetzen.com\/stock-screener\/?t=5&amp;p=1&amp;f[roe]=0.3%2C&amp;f[de]=0%2C2&amp;s=mc&amp;sd=desc\" target=\"_blank\" rel=\"noopener\">exceptional ROE<\/a>.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><a href=\"https:\/\/www.wallstreetzen.com\/stock-screener\/?t=5&amp;p=1&amp;f[roe]=0.3%2C&amp;f[de]=0%2C2&amp;s=mc&amp;sd=desc\" target=\"_blank\"><img decoding=\"async\" width=\"1000\" height=\"518\" src=\"https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2022\/04\/wallstreetzen-screener-good-return-on-equity.gif\" alt=\"\" class=\"wp-image-413\"\/><\/a><\/figure>\n\n\n\n<p>In his <a href=\"https:\/\/www.berkshirehathaway.com\/letters\/1987.html\" target=\"_blank\" rel=\"noopener\">1987 letter to Berkshire Hathaway shareholders<\/a>, Warren quoted a study by Fortune magazine where Fortune looked at 1000 of the largest stocks in the US and found that:<\/p>\n\n\n\n<p>Only 6 of the 1000 companies averaged over 30% ROE over the previous decade (1977-1986)<\/p>\n\n\n\n<ul>\n<li>Only 25 of the 1000 companies averaged over 20% ROE <em>and<\/em> had no single year lower than 15% ROE<\/li>\n\n\n\n<li>These 25 \u201cbusiness superstars were also stock market superstars\u201d as 24 out of 25 outperformed the S&amp;P 500 during the 1977-1986 period.<\/li>\n<\/ul>\n\n\n\n<p>If you go to Wall Street Zen, you can see we have a due diligence check to see if the company\u2019s ROE is over 20%.<\/p>\n\n\n\n<figure class=\"wp-block-image\"><a href=\"https:\/\/www.wallstreetzen.com\/stocks\/us\/nasdaq\/msft\/earnings\" target=\"_blank\"><img decoding=\"async\" src=\"https:\/\/lh3.googleusercontent.com\/Lge1HlVzfg-xckW7fX2U79nD5DoBJTW3NLWK35QaCAeYJBxT_8x3va2GwvQHioAXdnnzdUiNcB-3LYqmJ04VKgsDQ4lrbGOPTD-k3HDf2YCGFa2Qg2yK4wIAJPZ6l_UP3oYVU7Hm\" alt=\"\"\/><\/a><figcaption class=\"wp-element-caption\">Source: <a href=\"https:\/\/www.wallstreetzen.com\/stocks\/us\/nasdaq\/msft\/earnings\" target=\"_blank\">MSFT Earnings<\/a><\/figcaption><\/figure>\n\n\n\n<p>This quickly tells you if a company is highly efficient at transforming shareholder equity into returns.<a href=\"https:\/\/www.wallstreetzen.com\/stocks\/us\/nasdaq\/msft\/earnings\" target=\"_blank\"><\/a><\/p>\n\n\n\n<h3>Average ROE by Industry<\/h3>\n\n\n\n<p>ROE is not only useful for assessing the profitability of individual companies, but it\u2019s useful for assessing industries, too. <\/p>\n\n\n\n<p>You can use WallStreetZen to see the average ROE of any <a href=\"https:\/\/www.wallstreetzen.com\/sectors\" target=\"_blank\" rel=\"noopener\">stock market sector<\/a>, or <a href=\"https:\/\/www.wallstreetzen.com\/industries\" target=\"_blank\" rel=\"noopener\">stock market industry<\/a>.<\/p>\n\n\n\n<figure class=\"wp-block-image\"><a href=\"https:\/\/www.wallstreetzen.com\/industries\" target=\"_blank\"><img decoding=\"async\" src=\"https:\/\/lh6.googleusercontent.com\/T9Mb-Pa_EOrgSGm0jZVwBEkmLoFG1vPrfyO-UBv5CGxhYaWLo29sI5jFVmrwb3bwP0Itib9mwZvreGV9m8enTL0JVCyc0HowBN-ZKkj0q5ikQ0BMqdUOIACHBW-0pI8DbRFyP02K\" alt=\"\"\/><\/a><\/figure>\n\n\n\n<h2>Pros and Cons Of Return on Equity (ROE)<\/h2>\n\n\n\n<p>Return on equity (ROE) may be one of Warren Buffett\u2019s most important financial ratios, but that doesn&#8217;t mean it\u2019s perfect.<\/p>\n\n\n\n<p>You should never use a single financial ratio to decide whether to buy or sell a stock. This rule applies to ROE as well.<\/p>\n\n\n\n<p>(Read this article to learn <a href=\"https:\/\/www.wallstreetzen.com\/blog\/how-to-know-what-stocks-to-buy\/\" target=\"_blank\" rel=\"noopener\">how to know what stocks to buy<\/a>.)<\/p>\n\n\n\n<p>Understanding the strengths and weaknesses of ROE helps you use it correctly as a tool in evaluating stocks.<\/p>\n\n\n\n<h3>Pros of ROE<\/h3>\n\n\n\n<p>Here are some of the reasons return on equity is a good metric to look at.<\/p>\n\n\n\n<h4><strong>ROE surfaces quality companies with good management<\/strong><\/h4>\n\n\n\n<p>A high RoE does not mean that much if looked at as a snapshot in time.<\/p>\n\n\n\n<p>You need to see consistently high ROE over many years to be able to use it as a gauge of management\u2019s performance.<\/p>\n\n\n\n<p>Exceptionally well managed companies demonstrate a high ROE, year over year, decade over decade. A good ROE is a sign of strong capital allocation, effective use of leverage, and an economic moat.<\/p>\n\n\n\n<p>A manager can improve ROE by generating more profit with fewer assets, increasing profit margin, or effectively using leverage&nbsp; &#8211; all of which get captured in the ROE metric.&nbsp;<\/p>\n\n\n\n<p>As a company generates earnings, those earnings are retained in the company and it increases shareholder equity. Thus it actually gets more difficult for mediocre companies to sustain ROE over time.<\/p>\n\n\n\n<p>Keeping ROE steady or even increasing over many years is no small feat, and those companies that can achieve this are exceptionally well run companies able to consistently find opportunities to generate shareholder wealth.<\/p>\n\n\n\n<h4><strong>ROE gives us a consistent way to compare companies<\/strong><\/h4>\n\n\n\n<p>Out of all the profitability ratios, ROE most directly measures shareholder returns. While earnings can vary across sectors and industries, ROE makes it easy to directly compare earnings across sectors.<\/p>\n\n\n\n<p class=\"has-text-align-center\"><strong>\ud83d\udca1 On WallStreetZen, you can quickly see the average ROE across <a href=\"https:\/\/www.wallstreetzen.com\/sectors\" target=\"_blank\" rel=\"noopener\">stock market sectors<\/a>.<\/strong><\/p>\n\n\n\n<p>ROE helps us quickly screen out companies that are not generating returns for us, the shareholders.<\/p>\n\n\n\n<h3>Cons of ROE<\/h3>\n\n\n\n<p>While we\u2019ve looked at some of the advantages of using ROE, let\u2019s dive into some of the disadvantages:<\/p>\n\n\n\n<h4><strong>Debt can heavily skew ROE<\/strong><\/h4>\n\n\n\n<p>ROE can be artificially inflated by the use of debt.<\/p>\n\n\n\n<p>This is because shareholder equity (ROE\u2019s denominator) and debt are connected.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><a href=\"https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2022\/10\/debt-to-equity.jpeg\" target=\"_blank\"><img decoding=\"async\" width=\"1280\" height=\"720\" src=\"https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2022\/10\/debt-to-equity.jpeg\" alt=\"\" class=\"wp-image-1913\" srcset=\"https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2022\/10\/debt-to-equity.jpeg 1280w, https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2022\/10\/debt-to-equity-768x432.jpeg 768w\" sizes=\"(max-width: 1280px) 100vw, 1280px\" \/><\/a><\/figure>\n\n\n\n<p>If you increase debt, equity decreases. And if the denominator decreases, the ROE formula produces a higher ROE.<\/p>\n\n\n\n<p>Because equity = assets &#8211; <em>liabilities<\/em>, <strong>a company can actually increase ROE simply by taking on more debt!<\/strong><\/p>\n\n\n\n<p>That\u2019s why it\u2019s important to watch ROE over many years &#8211; a company that increases ROE by taking on debt may inflate ROE in the short term, but if it cannot effectively generate return from that debt, in the long term its ROE will suffer.<\/p>\n\n\n\n<p>This is also why it\u2019s important to look at metrics holistically &#8211; in this case, looking at debt to equity (D\/E) and the company\u2019s balance sheet alongside ROE can also help investors identify cases where high use of leverage is inflating ROE.<\/p>\n\n\n\n<p>If you\u2019re screening for high ROE companies, you may  want to <em>screen out<\/em> companies with high D\/E as well.<\/p>\n\n\n\n<p><strong>\ud83d\udc49 Here is a link to a <a href=\"https:\/\/www.wallstreetzen.com\/stock-screener\/?t=1&amp;p=1&amp;f[roe]=0.2%2C&amp;s=mc&amp;sd=desc\" target=\"_blank\" rel=\"noopener\">screener<\/a> where you can screen for companies with high ROE, AND a reasonable Debt to equity ratio<\/strong>.<\/p>\n\n\n\n<p>Another way you can quickly sanity check the RoE number is by looking at Return on Assets &#8211; which doesn\u2019t include debt in the denominator &#8211; if you see a company with a good ROE but poor ROA, might be another sign company is drowning in debt.<\/p>\n\n\n\n<h4><strong>ROE Is Not Effective For Growth Companies<\/strong><\/h4>\n\n\n\n<p>Like all ratios that rely on earnings (P\/E most famously), ROE cannot effectively measure loss-making companies. This rules out most growth companies.<\/p>\n\n\n\n<p>Generally, ROE is better for evaluating stable, mature companies.<\/p>\n\n\n\n<h4><strong>ROE is Subject to Earnings Manipulation<\/strong><\/h4>\n\n\n\n<p>Earnings can be misleading. Whether intentionally or unintentionally, companies can paint a better picture by using accounting tricks to paint a rosier picture.<\/p>\n\n\n\n<p>This is again why it\u2019s important to analyze ROE over many years, and also combine quantitative indicators with a qualitative analysis of the business.<\/p>\n\n\n\n<p>Past earnings is not a sign of future earnings.<\/p>\n\n\n\n<h2>How to Use ROE In Your Stock Analysis<\/h2>\n\n\n\n<p>Profitability ratios like ROE are a great way to screen for well-managed companies that are producing returns for you, the shareholder!<\/p>\n\n\n\n<p>While there are some downsides to the ratio, like with all financial ratios, they are not magic &#8211; they are tools you can use to better understand a company.<\/p>\n\n\n\n<p>And while ROE is a great metric for assessing a company\u2019s efficiency at generating profits based on shareholder\u2019s equity, if this efficiency is already baked into the price &#8211; <strong>the stock may not necessarily be good value.<\/strong><\/p>\n\n\n\n<p>A high ROE may help you identify a quality company, but you need to look at valuation metrics to determine whether or not it is at a fair price.<\/p>\n\n\n\n<p>Here at WallStreetZen, we created <a href=\"https:\/\/www.wallstreetzen.com\/blog\/zen-score\/\" target=\"_blank\" rel=\"noopener\">Zen Score<\/a> to try to make it as easy as possible for you to do fundamental analysis across all important aspects of a stock, so you can focus your time and energy on understanding the companies you invest in, rather than hunting for data and messing around with spreadsheets.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><img decoding=\"async\" width=\"376\" height=\"376\" src=\"https:\/\/www.wallstreetzen.com\/blog\/wp-content\/uploads\/2022\/01\/zen-score-pricing-page_375x375.gif\" alt=\"\" class=\"wp-image-379\"\/><\/figure><\/div>\n\n\n<p class=\"has-text-align-center\">\ud83d\udca1 <strong><a href=\"https:\/\/www.wallstreetzen.com\/plans?redirect_to_checkout=1#comparison\" target=\"_blank\" rel=\"noopener\">Click here to sign up for a 14-day trial today<\/a>, and see how WallStreetZen makes data-informed investing easier for part-time investors like you and me.&nbsp;<\/strong><\/p>\n\n\n\n<p>Interested in getting high-quality stocks picks delivered straight to your inbox? Read this review of the <a href=\"https:\/\/www.wallstreetzen.com\/blog\/best-investment-newsletters\/\" target=\"_blank\" rel=\"noopener\">best investment newsletters in 2026<\/a>.<\/p>\n\n\n\n<p><strong>Read more: <\/strong><a href=\"https:\/\/www.wallstreetzen.com\/blog\/what-is-a-good-pe-ratio\/\" target=\"_blank\" rel=\"noopener\">What is a Good P\/E Ratio<\/a>?<\/p>\n\n\n\n<hr class=\"wp-block-separator has-css-opacity\"\/>\n\n\n\n\t\t<div class=\"wp-faq-schema-wrap\">\n\t\t\t\t\t\t\t<h2>FAQs:<\/h2>\n\t\t\t\t\t\t<div class=\"wp-faq-schema-items\">\n\t\t\t\t\t\t\t\t\t<h3>Is a 20% ROE good?<\/h3>\n\t\t\t\t\t<div class=\"\">\n\t\t\t\t\t\t<p>A 20% ROE that is sustained for multiple years is usually a sign of a very strong company.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t<h3>What is a too high ROE?<\/h3>\n\t\t\t\t\t<div class=\"\">\n\t\t\t\t\t\t<p>Technically, there's no such thing as a too high ROE. But if a company has a very high ROE, it was likely caused by abnormal circumstances - you should expect it to come back in to a normal range.<\/p>\n<p>A company with a 20% ROE sustained for 10 years is better than a company with a 60% ROE for 1 year.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t<h3>Is 10% a good ROE?<\/h3>\n\t\t\t\t\t<div class=\"\">\n\t\t\t\t\t\t<p>A 10% ROE is not great, though there may be external factors dragging it down and the underlying business might be better than the ROE indicates.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t<h3>What is a good ROE for a business?<\/h3>\n\t\t\t\t\t<div class=\"\">\n\t\t\t\t\t\t<p>Any ROE of 20% or more is considered good, while a 30%+ ROE is considered exceptional.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\n","protected":false},"excerpt":{"rendered":"<p>I often get asked by users of our stock research tool: what is a good ROE? And why should I care? A consistent return on equity (ROE) of 20% or higher is considered a good ROE. However, there are some caveats, which I&#8217;ll dive into shortly. Return on equity is so one of the crucial [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":411,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false},"categories":[2],"tags":[],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What Is a Good ROE? How to Calculate Return On Equity - ROE Formula<\/title>\n<meta name=\"description\" content=\"What is a good ROE and why? 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