ROE: The Key to Measuring Capital Profitability

Buying a stock at its intrinsic value is essential, but choosing a company that generates high returns on its capital is equally crucial. This is exactly what ROE (Return on Equity) measures: the profitability of equity.

Why ROE is the King Indicator of Value Investing

ROE is not just a financial ratio. It answers a fundamental question: Is the company effective at turning the money its owners have entrusted it with into new profits?

Warren Buffett, one of the greatest value investors, considers ROE a key indicator. A company with a high and consistent ROE is often one capable of growing without needing to continuously raise new capital.

1. The Simple Definition of ROE

Pour aller plus loin, utilisez notre calculateur de valeur intrinsèque pour estimer une fourchette de valeur sur un ticker, et parcourez les autres articles du blog ainsi que la page Définition pour approfondir les concepts d'investissement de valeur.