Return on Equity Calculator
How efficiently does the company compound shareholder equity?
Also available in German: Eigenkapitalrendite-Rechner (ROE) →
Inputs
Net income
Also called: Net profit, earnings, bottom line
Where to find it: Income statement, very last line.
How to derive: Revenue − all costs, interest and taxes.
Shareholder equity
Also called: Net assets, book value
Where to find it: Balance sheet, bottom of the liabilities & equity side.
How to derive: Total assets − total liabilities.
Result, live
Sustained >15% is the Buffett bar for quality businesses. Beware negative equity from buybacks.
Return on equity (ROE) shows how much profit a company earns on the shareholder equity it employs. It is Warren Buffett's favourite quality gauge: a business that sustains more than 15% compounds owners' capital above average.
How the formula works
You divide net income by shareholder equity and express it in percent. The higher it is, the more efficiently management works with the owners' capital.
Example: $500m profit on $3,200m equity. ROE = 500 ÷ 3,200 × 100 = 15.6% — just above the quality bar.
How to read the result
- Above 15%: strong — Buffett's quality level.
- 8 to 15%: decent but unremarkable.
- Below 8%: weak — the capital works too little.
What to watch out for
- High debt inflates ROE artificially — read it alongside the debt-to-equity ratio.
- With negative equity (often from buybacks) the ratio is meaningless.
- One-off gains or write-downs distort a single year — watch the trend.
Return on equity by sector
A return on equity only means something next to the company's own sector: asset-light business models reach high returns on equity easily, capital-intensive ones rarely. The table shows median and range for every sector from our database, updated daily.
| Sector | Lower quartile | Median | Upper quartile | Stocks |
|---|---|---|---|---|
| Communication Services | -6.7 % | 2.8 % | 12.2 % | 1,166 |
| Health Care | -15.0 % | 3.6 % | 12.2 % | 2,355 |
| Real Estate | -1.1 % | 3.8 % | 9.1 % | 1,825 |
| Materials | -3.5 % | 4.0 % | 11.1 % | 3,538 |
| Energy | -3.8 % | 5.3 % | 13.0 % | 1,190 |
| Consumer Discretionary | -0.5 % | 5.4 % | 12.8 % | 3,718 |
| Information Technology | -2.9 % | 5.5 % | 13.9 % | 3,490 |
| Industrials | 0.1 % | 6.8 % | 13.7 % | 5,302 |
| Consumer Staples | 0.0 % | 7.0 % | 14.1 % | 1,734 |
| Utilities | 2.5 % | 7.9 % | 12.1 % | 667 |
| Financials | 2.9 % | 9.4 % | 14.8 % | 3,279 |
Source: the Fair Value Calculator database, 28,264 stocks with a valid value for Return on equity, as of Sep 5, 2026. Median: half of the sector's stocks sit below it. Lower and upper quartile: 25 % sit below or above. Values move daily with prices. All valuation ratios by sector →