Return on Equity (RoE) is a crucial financial ratio that helps investors evaluate a company's profitability and efficiency in generating returns for its shareholders. It reflects how well a company utilizes the equity invested by its shareholders to generate profits. Now, why talk of RoE at this point of time? Because, valuations are still high and there is a possibility of fresh headwinds. So, if you are putting fresh money into the market and have to choose between two stocks, the decision should weigh in favor of the one with the better RoE, apart from other quantitative parameters.
