What does return on equity mean?

How much profit the company earns on the money shareholders have invested.

How do you interpret return on equity?

Higher is better, but very high ROE can be manufactured by leverage — a thin equity base inflates the ratio. Read it next to debt-to-equity and ROIC to tell genuine returns from balance-sheet engineering.

How does return on equity compare across companies?

Comparable across peers, with the leverage caveat. Negative or near-zero equity makes ROE meaningless, so it is suppressed there.

Hilton Worldwide HLT Return on equity

Discontinued — last reported Q1 '19

Return on equity at other companies

Hyatt HotelsH

-1%-24.9pp

AirbnbABNB

32.3%+0.3pp

Host Hotels & ResortsHST

15%+4.9pp

Invitation HomesINVH

6.2%+1.4pp

Expedia Group, Inc.EXPE

180.6%+61.4pp

Equity Lifestyle PropertiesELS

22.7%-1.3pp

Other financials

Income statement

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Revenue$2.9B+9.0%

Operating income$678.0M+26.5%

Net income$385.0M+28.3%

EPS (diluted)$1.66+35.0%

Balance sheet

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Cash & equivalents$619.0M-23.3%

Total debt$13.2B+5.4%

Total equity-$5.9B-34.9%

Total assets$16.4B+2.1%

Cash flow

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Operating cash flow$618.0M+36.7%

CapEx$9.0M-52.6%

Free cash flow$609.0M+40.6%

Valuation

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Market cap$79.41B+27.4%

Enterprise value$91.97B+23.8%

P/E51.5×+11.8×

P/S6.5×+0.9×

Profitability

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Operating margin23.1%+2.1pp

Net margin12.6%-1.3pp

FCF margin17.9%+0.1pp

Returns & leverage

See full

Debt / equity89.7×—

Current ratio0.6×0.0×

Where this comes from

Calculated from Hilton Worldwide’s reported figures.

net income/total stockholders equity=82.6%

Based on trailing twelve months.

The official record: Hilton Worldwide’s 10-Q, filed May 7, 2020, on SEC EDGAR. View the filing →

Questions, answered.

What does return on equity mean?: How much profit the company earns on the money shareholders have invested.
How do you interpret return on equity?: Higher is better, but very high ROE can be manufactured by leverage — a thin equity base inflates the ratio. Read it next to debt-to-equity and ROIC to tell genuine returns from balance-sheet engineering.
How does return on equity compare across companies?: Comparable across peers, with the leverage caveat. Negative or near-zero equity makes ROE meaningless, so it is suppressed there.