The #1 Thing You Need to Know About Daimler Truck Holding AG (ETR:DTG) Before Making a Move

Many investors are still learning about the various metrics that can be useful when analysing a stock. This article is for those who would like to learn more about Return on Equity (ROE) and why it is an important metric for evaluating how effectively a company is generating profits. To keep the lesson grounded in practicality, we'll use ROE to better understand Daimler Truck Holding AG (ETR:DTG).

ROE is useful for comparing the ROE of different companies. Simply put, it is used to assess the profitability of a company, relative to the amount of equity the business has.

Our data shows Daimler Truck Holding AG has a return on equity of 35% for the last year. Its return on equity is no doubt quite impressive, in fact, it is above the average ROE for the Machinery industry, which is 10%.

Our analysis on Daimler Truck Holding AG's ROE is founded on its average of 23% over the past five years which indicates that the company has provided 35% return on average each year, given the current capital structure. Given the industry profile, we've compiled a snap shot of the ROE of related companies which indicates an established path of stability in terms of ROE.

Many investors favour ROE as a metric which displays the quality of a company and its ability to generate profits. With ROE at an all-time high for Daimler Truck Holding AG shareholders, the return on regular capital is relatively higher as compared to its industry peers.

It's worth noting that its relatively expensive in comparison with the Machinery industry.

Several factors should be considered in order to estimate the extent to which ROE can add any value when forecasting future earnings, as there are variations in circumstances that can influence the sustainability and nature of the company's returns.