Return on Equity as a guide to investing

Return on Equity (ROE) figures were extracted from StockFacts in Singapore Exchange website.

Stock ROE (%)
StarHub 292.31
M1 47.49
SGX 36.73
Keppel Corp 18.18
SembCorp Marine 18.14
SingTel 15.55
SingPost 14.72
SembCorp Ind 14.19
OCBC 13.10
Raffles Medical 12.69
SATS 12.69
Comfort Delgro 12.18
UOB 10.94
DBS 10.85
SPH 10.61
SMRT 10.38
City Dev 8.52
UOL 7.69
CapitaLand 7.21
SBS Transit 500 4.94
SIA 3.40

Despite the challenging business environment, some companies are expected to give positive return to shareholders for this year.

For every $100 an investor placed with the company, it could make $15.55 for investor in the year (as in the case of SingTel). When one buys shares of a business, he is buying into a part of the company. Investors can study these ROE numbers to make their investment decisions.

One should not panic with wild swings in share prices. Have faith in some companies as they make profits for the shareholders. Making profits is no dependent on how the share price moves. It is business decisions that determines profits for the year.

Notes:

Return on Equity (ROE) is an important indicator for investors. It tells investors how much the company is earning (profits) for the shareholders. It is net profits attributable to shareholders divided by shareholders’ funds calculated as a percentage term.

The higher the ROE, the better for the shareholders. Because it is calculated as percentage term, we can compare one ROE with another ROE of another company.

Copyright © 2015, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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