Question

What is the current trend for ROE among U.S. companies?

Answer 1

As we know that ROE is a measure of profitability for all types of companies in world economies. ROE measures relationship between earnings available for shareholders and shareholders’ equity. In other words we can say that how much return is available on invested shareholders’ equity is measured with the help of ROE.

From recent results of various companies it is clear that some companies have consistence ROE. Some companies showed increasing trend wheras few companies also showed negative ROE trend but overall we can say that there iis positive trend in the ROE of the US companies. Let’s see ROE of some important sectors in US during recent years;

Aerospace/Defense = 19.11%

Air Transport = 24.54%

Auto Parts = 18.22%

Bank (Money Center) = 9.93%

Beverage (Alcoholic) = 25.15%

Computer Services = 21.77%

Drugs (Pharmaceutical) = 10.51%

Electronics (Consumer & Office) = (15.28%)

Entertainment = 18.97%

Financial Svcs. (Non-bank & Insurance) = ($0.29%)

Green & Renewable Energy = 0.64%

Oil/Gas (Production and Exploration) = (4.88%)

So on the basis of above information, it is clear that some sectors and its companies are showing very good ROE trends wheras some sectors and its companies are showing average ROE. But some sectors and its companies such as (Oil & Gas, Financial services, Electronics) are showing negative ROE trends which is question of worry for these nagative ROE sectors.