Historical Return-on-Equity

Taking a look at Apple over thirty years

We just looked at return-on-equity by industry and sector in the last two posts. This is in addition to the way ROE is normally calculated, as a point in time estimate.

However, ROE changes quite a bit through a company’s life cycle. Just take a look at Apple over the last thirty years:

One thing we may want to consider for a stock is not just whether it is profitable today but whether it is profitable as compared to the past. If we look at Apple right now versus the industry, sector, and long-term average of its own historical performance, we see a massive advantage:

The reason we have been looking at all these different types of ROE is because we want to gather as many perspectives on a company’s financial metrics as we can to most accurately assess it.

Now, we have four different ways to do that! I’m sure we will think of more but that’s a good start for now so that we can move on to the next application for all of these numbers - making an investment scorecard.

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