While at least the ROE is not lower than the industry, its still worth checking what role the company's debt plays as high debt levels relative to equity may also make the ROE appear high. That's neither particularly good, nor bad. NasdaqGS:SGH Return on Equity October 6th 2022 The image below shows that SMART Global Holdings has an ROE that is roughly in line with the Semiconductor industry average (19%). Importantly, this is far from a perfect measure, because companies differ significantly within the same industry classification. Does SMART Global Holdings Have A Good Return On Equity?Īrguably the easiest way to assess company's ROE is to compare it with the average in its industry. That means that for every $1 worth of shareholders' equity, the company generated $0.18 in profit. So, based on the above formula, the ROE for SMART Global Holdings is:ġ8% = US$69m ÷ US$379m (Based on the trailing twelve months to August 2022). Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity

Return on equity can be calculated by using the formula: See our latest analysis for SMART Global Holdings How Do You Calculate Return On Equity? In other words, it is a profitability ratio which measures the rate of return on the capital provided by the company's shareholders.

Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. To keep the lesson grounded in practicality, we'll use ROE to better understand SMART Global Holdings, Inc. With that in mind, this article will work through how we can use Return On Equity (ROE) to better understand a business. One of the best investments we can make is in our own knowledge and skill set.

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