What is ROE in Stock Market - Return on Equity or RoE is one of the most important profitability metrics for investors, because this measures how effectively the management is using the company's assets to create profits. _________________________________________________________________________ Timestamp 0:00 Return on Equity in Stock Market 0:31 What is RoE in Stock Market 0:45 Calculation of Return on Equity Ratio 1:03 Example for Return On Equity 1:48 How to Check ROE Online 2:35 Comparing with Historical Return on Equity 3:41 What is Return On Equit in Stocks 4:52 ROE Meaning in Stock Market _________________________________________________________________________ Description A positive RoE indicates that the company is generating profits over shareholder's funds whereas a negative RoE indicates that the company is giving losses. Calculation of Return on Equity Return on Equity is calculated by dividing Net Income by Shareholders Equity. ROE = Net Income / Shareholder's Equity Net Income is nothing but the Net profit after tax but before distributing the dividends. Shareholder equity is equal to total assets minus total liabilities. For example, consider company A, which has Total Assets as 500 crores and Total Liabilities as 200 crores. Then the Shareholder's Equity will be equal to 300 crores. If the net income after taxes is 100 crores in a year, then the Return on Equity is Net Income divided by Shareholders equity, which is 33%. If a company has high Return on Equity, then it signifies that the company has strong financials and business model that enables it to deliver high returns on the shareholders’ funds. In our example, The RoE value indicates that the Company A can generate 33% per annum on Shareholder's funds. How to quickly check RoE of a Stock Go to TrendLyne. You may login using your Google credentials. On the top right corner, you will find a search box. Type in the name of the stock that you want to analyze. Let me search for TCS. Click on the option Financials under the stock name. This will take you to the Fundamentals or Financials section of the TCS. Now go to the sub-menu Financial Ratios. Scroll down and you will be able to see the ROE Annual %. The current Annual ROE of TCS is 38.44% which is very good. Comparing with Historical Values Comparing the current RoE with the RoE of the past years will give a good idea about whether the company is able to sustain and grow the profits every year. If the RoE has consistently increased in the past few years, then that indicates the company's ability to sustain and grow the profits. A sustainable and increasing ROE over time can mean a company is good at generating value to shareholders because it knows how to reinvest its earnings wisely, so as to increase productivity and profits. Let us screen for all those stocks which have a ROE greater than 20% and also the ROE has been increasing steadily in the last 3 to 5 years. Create a new screener in TrendLyne. Let’s put down our conditions in the query to screen for all the stocks whose ROE is greater than 20% and also has shown an increase in the last 3 to 5 years. Sort by market cap to have the large cap stocks in the top. You may see that Hindustan Unilever, Nestle and Petronet LNG are the top stocks with steadily increasing ROE. On contrast, a declining ROE can mean that management is making poor decisions and reinvests profits in unproductive assets. _________________________________________________________________________ #saveandinvestsmartly #roe #fundamentalanalysis #stockmarket