This gives an expected
return on equities of 6 %: 1 % real growth + 2 - 3 % for inflation + 2 % dividends.
Now all this said, insurance companies have had a lower
return on equity in the past 20 years than all other companies on average.
It now invests in companies that need tons of capital expenditures, are over regulated, and earn
lower returns on equity capital.
• Good financials, including
good return on equity, strong cash flows, reasonable debt, and projected earnings growth in the 10 % range per year.
The company trades at a price equal to its book value,
with return on equity coming in at just under 11 %.
Based on recent corporate leverage, this decline in the cost of debt would increase the typical company's
return on equity by more than four percentage points.
However, it's currently operating at an underlying loss, and even with aggressive cost - cutting plans there's no sign of a
decent return on equity on the horizon.
It's a good idea to always look
at returns on equity, but you don't really have to set the threshold at 17 %.
[Though obviously it's not an issue for companies with a decent
annual return on equity / capital — no multiple expansion is actually required to produce an attractive return over time].
We also prefer companies with
strong returns on equity, healthy market performance over the last year, and low - to - moderate price - to - sales ratios.
«They're so profitable and generate strong returns that they don't need to take on too much debt to get
attractive returns on equity,» he says.
The deals that are listed on the website offer 9 - 9.5 % returns on loans and 17 % internal rate of
returns on equity deals.
The materials and energy sectors also scored notably well on earnings growth, while energy's free - cash - flow yield and
return on equity remain challenged.
The average
returns on equity indexed annuities (or fixed indexed annuities) tend to be higher than fixed annuities or bank products due to the linking to index returns.
On the other hand, if the yen strengthens against the dollar, it will immediately... it improves the
dollar return on equity, while making the business less competitive abroad.
In their study, the authors
use return on equity, gross margins, and leverage in addition to the most popular measure, gross profitability.
Assuming
consistent returns on equity, the first business will require an additional $ 6 million of capital while the second business will require an additional $ 14 million.
A closely watched investment - performance ratio
called return on equity is well below levels achieved a decade ago.
The second place project as
returns on the equity go is the alternative project for investment by which the winning project is judged.
A high
return on equity usually means that the company has an above - average financial operating ratio and can often fund projects internally.
So to produce a
solid return on equity they must either possess very low cost deposits or spend considerably less on back office operations than peers.
As an investor or CEO, one of your goals is to utilize the right mix of debt and equity to provide the highest
return on equity possible.
Factor - based investing provides a route to objectively capture inexpensive companies (via value factors) or companies with robust balance sheets and
steady returns on equity (via quality factors).
And management's lack of financial discipline was clearly evident in the minimal (low single - digit) net profits &
return on equity recorded in 2006 - 07.