Energia

ROE or return on equity is a useful tool to assess how effectively a company can generate returns on the investment it received from its shareholders. In short, ...

Alternatively, email editorial-team (at) simplywallst.com. Having said that, while ROE is a useful indicator of business quality, you'll have to look at a whole range of factors to determine the right price to buy a stock. As you can see in the graphic below, Energía Innovación y Desarrollo Fotovoltaico has a higher ROE than the average (14%) in the This article by Simply Wall St is general in nature. Return on equity is useful for comparing the quality of different businesses. Conservative use of debt to boost returns is usually a good move for shareholders, though it does leave the company more exposed to interest rate rises. In this manner the use of debt will boost ROE, even though the core economics of the business stay the same. In the latter case, the use of debt will improve the returns, but will not change the equity. One way to conceptualize this is that for each €1 of shareholders' capital it has, the company made €0.44 in profit. However, bear in mind that a high ROE doesn’t necessarily indicate efficient profit generation. In short, ROE shows the profit each dollar generates with respect to its shareholder investments. By way of learning-by-doing, we'll look at ROE to gain a better understanding of Energía, Innovación y Desarrollo Fotovoltaico, S.A.